E
Synthesis of Business Models and Economic and Market Incentives for Vaccines and Therapeutics

The following is a white paper prepared for the February 22–24, 2010, workshop on the public health and medical countermeasure enterprise, hosted by the Institute of Medicine Forum on Medical and Public Health Preparedness for Catastrophic Events and Forum on Drug Discovery, Development, and Translation. All opinions expressed in this paper are those of the author and not necessarily of the Institute of Medicine.


By James Guyton, Hannah McClellan, and Fanni Li

Public Health and Biodefense Practice

PRTM

ABOUT THIS PAPER

Background and Charge

This paper has been developed to support an HHS Secretary-directed review of the Medical Countermeasures Enterprise (MCME) that addresses public health emergency threats including chemical, biological, radiological, and nuclear (CBRN) agents as well as pandemic influenza and other emerging infectious disease (EID). The objective is to conduct “a review of [HHS’s] entire public health countermeasures enterprise … to look at how our policies affect every step of countermeasure development and production and then ask: how can we do better?” The Secretary has charged the Office of the Assistant Secretary for Preparedness and Response (ASPR) with leading the



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E Synthesis of Business Models and Economic and Market Incentives for Vaccines and Therapeutics The following is a white paper prepared for the February 22–24, 2010, workshop on the public health and medical countermeasure enterprise, hosted by the Institute of Medicine Forum on Medical and Public Health Preparedness for Catastrophic Events and Forum on Drug Discovery, Development, and Translation. All opinions expressed in this paper are those of the author and not necessarily of the Institute of Medicine. By James Guyton, Hannah McClellan, and Fanni Li Public Health and Biodefense Practice PRTM ABOUT THIS PAPER Background and Charge This paper has been developed to support an HHS Secretary-directed review of the Medical Countermeasures Enterprise (MCME) that addresses public health emergency threats including chemical, biological, radiological, and nuclear (CBRN) agents as well as pandemic influenza and other emerging infectious disease (EID). The objective is to conduct “a review of [HHS’s] entire public health countermeasures enterprise ... to look at how our policies affect every step of countermeasure development and production and then ask: how can we do better?” The Secretary has charged the Office of the Assistant Secretary for Preparedness and Response (ASPR) with leading the 113

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114 EMERGENCY MEDICAL COUNTERMEASURES ENTERPRISE review, given the ASPR’s responsibility for directing and coordinating HHS’s activities relating to protecting the U.S. population from acts of terrorism and other public health and medical threats and emergencies. This white paper will be used by the ASPR and by subsequent planning committees to develop public and stakeholder workshops to examine alternative methods and models for achieving successful product development, approval, procurement, and delivery to the U.S. populations. As part of the larger public health enterprise review, this white paper explores the following topic: Synthesis of Business Models and Economic and Market Incentives for Vaccines and Therapeutics. Paper Objectives The objective of this paper is to explore alternative policies, business models, and incentives that can be used to foster a more effective and sustainable medical countermeasure enterprise. Particular focus will be placed on identifying ways to further the pharmaceutical industry’s engagement in the MCME to move candidate medical countermeasures through advanced development and provide approved or licensed products for operational use. To this end, this paper will identify 1. challenges to engaging industry in the MCME and what is needed to overcome those challenges; 2. new and innovative policies, strategies, and incentives to encourage industry participation in the MCME; and 3. issues related to pursuing these new and innovative policies, strategies, and incentives. Scope This paper focuses primarily on policies, business models and incentives for increasing industry involvement in the MCME’s programs for medical countermeasures for CBRN threats. The paper does not focus on the Pandemic Influenza program, given the already high level of involvement of multiple large-scale commercial vaccine manufacturers in the program, although the program is considered within the context of other models that may offer some approaches that could be applied to CBRN.

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APPENDIX E 115 Methodology The findings in this paper have been synthesized through a review of several literature sources, including published papers, MCME agency documents, and public presentations. This literature has been supplemented by findings from interviews with numerous stakeholders from industry, academia, and government agencies represented in the MCME. A bibliography and list of interviewees are provided at the end of the paper. This paper has benefited from multiple interactions with participants in the February 23–24, 2010, Institute of Medicine workshop on The Public Health Emergency Medical Countermeasures Enterprise: Innovative Strategies to Enhance Products from Discovery through Approval as well as members of the National Biodefense Science Board’s Markets and Sustainability Working Group. EXECUTIVE SUMMARY MCM Development Challenges Developing medical countermeasures is critical to achieving the mission of protecting the U.S. population from acts of bioterrorism and other public health threats and emergencies. The MCM landscape is plagued by uncertainty in an already complex and challenging field where the development of pharmaceuticals and vaccines is inherently risky, lengthy, and costly. Successful achievement of mission goals will require close collaboration and partnership between the USG and public sector. Unfortunately, engaging experienced industry players, particularly large pharmaceutical companies, has proven challenging under the current MCME business model. Current Approach to MCM Development The Enterprise’s CBRN program investments to date have primarily focused on biological threats. Policy decisions on how MCM products against biological threats will be used emphasize post-event response with stockpiled MCM products. To obtain these MCMs, the MCME is seeking to develop new products (vaccines and therapeutics) for a diverse set of requirements (including special needs populations) against

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116 EMERGENCY MEDICAL COUNTERMEASURES ENTERPRISE thirteen Material Threat Determinations (MTDs). To fulfill this mission, the USG is partnering with MCM developers by employing a variety of incentives. Incentives include “push” mechanisms, such as grants and contracts for basic research and advanced development, as well as “pull” mechanisms, such as BioShield procurement contracts to entice MCM developers to develop MCMs through licensure or approval and produce them for procurement. To date, the incentives used to promote the MCME have succeeded in motivating significant engagement primarily by small innovator biotechnology companies. Industry Needs Incentives employed to date by the MCME are seen by industry to be insufficient to support robust development programs and to sustain a reliable market. As such, this approach has not created the conditions that would attract experienced industry participation. A more effective business model for MCM development could increase industry engagement by more successfully meeting the core needs of experienced pharmaceutical companies. To that end, we have identified three principal conditions that must be addressed: • Product Requirements: Developers need specific requirements for the MCM, including what the product should be (Target Product Profiles [TPP], including formulation, dosage, method of administration, etc.), how much will be required, and when it must be delivered. • Regulatory Clarity: Developers must have a clearly defined regulatory path to licensure, particularly with respect to the Animal Efficacy Rule requirements. • Return on Investment: Companies must realize adequate returns, financial or otherwise, to offset the opportunity costs of other potential projects. Medical Countermeasure Business Model Framework Top-down course corrections will likely be necessary to resolve the observable disconnect between industry needs and the current approach to MCM development to better engage private sector partners. The challenge at hand will not be solved with a short term solution, but rather through a series of policies and strategies coupled with tactical practices and incentives that will enable the current “business model” to evolve.

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APPENDIX E 117 The current approach to MCM development can be summarized as a business model composed of four basic components for achieving the goals of the MCME. The business model framework includes strategic, operational, and tactical planning elements, each of which plays a pivotal role in defining, organizing, and executing MCM development. The four elements of the MCME business model include to following: • Policies for Product Use: Policy decisions for how MCMs are used (e.g., stockpiling, vaccination/prophylaxis that drive MCM product requirements (what, and how much). • Product Strategies: Development of new MCM products vs. new indications for commercial products, or indications for special populations. • Players and Roles: Company and customer types, roles in development, and structure of partnerships. • Push and Pull Incentives: Incentives provided by the government to increase industry interest in MCM development opportunities. Incentives Incentives are a critical component of the business model, as they provide toolkits for executing strategic and operational plans. Incentives are generally grouped into “Push” incentives that lower the costs of development and “Pull” incentives, which provide the expected revenues. Our research focused primarily on incentives that have not yet been applied to the biodefense industry. We encountered a variety of opinions as to how applicable and successful various incentives would be at promoting MCM development. Key findings from interviews and literature include the follwing: • No one push or pull incentive is sufficient to attract experienced companies to the MCME. • There is no single best combination of incentives—the right package depends on context (policy and strategy decisions, requirements, technologies, pipeline maturity, etc.). • Pull strategies should focus on increasing return on investment (ROI) through sustainable markets while push strategies should focus on cultivating partnerships and collaborations. • Minimizing disincentives (e.g., lack of sustained and sufficient funding, government contracting process, lack of regulatory clarity)

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118 EMERGENCY MEDICAL COUNTERMEASURES ENTERPRISE may be enough to “tip the scale” and would “send a signal that the MCME is committed to collaborating with industry,” potentially attracting additional private investors to MCM development. Conclusion Under the current policy of focusing on post-event response based on product stockpiling, opportunities to increase industry participation exist across the latter three segments of the MCME Business Model Framework. Alternative policies for product use, in turn, could have a cascade of alternative approaches. The most frequently cited opportunities for increasing the level and mix of involvement by pharmaceutical and biotechnology companies in the MCME include the following: • Product Strategy: The USG should increase the emphasis on promoting multiple use products, platforms, and technologies with commercial applications. • Players and Roles: Role assignments should focus on performer strengths, with innovator companies driving products through proof of concept (POC), and then partnering with experienced companies for late-stage development and manufacturing. USG should explore opportunities to promote collaborations, whether these are bilateral partnerships between companies or public–private partnerships. • Incentives: The most critical incentive the USG can provide is to create a reliable market for MCM products. Additional incentives for consideration include priority review vouchers, new types of tax incentives for research and development (R&D) costs, and the funding of capital assets (equipment, manufacturing facilities, etc.) that can be leveraged for commercial purposes.

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APPENDIX E 119 INTRODUCTION Medical Countermeasure Development Challenges The development of critical countermeasures is an ongoing challenge for the MCME. Most of the threats featured in the 2007 Public Health Emergency Medical Countermeasures Enterprise (PHEMCE) Implementation Plan for CBRN threats (Table E-1 below) require development programs to achieve either approval/licensure for new MCM products or new indications for existing products. 1 Table E-1 Material Threat Determinations (MTDs) and Population Threat Assessments (PTAs) Issued to Date by the Department of Homeland Security DHS: Material Threat Determinations (MTDs) and Population Threat Assessments (PTAs) Bacilus anthracis (Anthrax) Marburg virus (Hemorrhagic Fever) Botulinum toxins (Botulism) Multi-drug resistant Bacillus anthracis (MDR Anthrax) Burkholderia mallei (Glanders) Radiological/Nuclear agents Burkholderia pseudomallei Rickettsia prowazekii (Typhus) (Meliodosis) Ebola virus (Hemorrhagic Fever) Variola virus (Smallpox) Franciscella tularensis (Tularemia) Volatile nerve agents [PTA only] Junin virus (Hemorrhagic Fever) Yersinia pestis (Plague) The MCME Environment Is Complex, Challenging, and Uncertain Unfortunately, the MCM landscape is plagued by uncertainty in an already complex and challenging field where the development of pharmaceuticals and vaccines is inherently risky, lengthy, and costly. Development cycles can take as long as 10 to 15 years and are conservatively estimated to cost $1.2 billion for small molecules and 1 2007 PHEMCE Implementation Plan.

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120 EMERGENCY MEDICAL COUNTERMEASURES ENTERPRISE $1.3 billion for biologics. 2 In contrast, Project BioShield’s 2004 funding is only $5.6 billion dollars over 10 years of procurement for at least 13 MTDs and 1 PTA. 3 Additionally, most product candidates that enter clinical trials do not succeed, with only 13% gaining regulatory approval. 4 Even if these products reach the market, 70% fail to recoup their R&D investments. 5 Moreover, under the current business and incentive model has largely constrained the Enterprise to working with smaller, less experienced companies with little or no history of successfully developing, licensing, and producing products. 6 Compounding these challenges is the overarching uncertainty that touches virtually every aspect of the MCM value chain, including product requirements, market size, and regulatory constraints. The “market” for CBRN MCMs has largely been determined by intermittent stockpile procurements by the U.S. government under Project BioShield. This approach makes it difficult to anticipate government procurements and thus creates market uncertainties for companies. As with any other industry, high levels of uncertainty and low expected returns lead to decreased investor interest and pose major challenges to the MCME. MCM development also faces regulatory uncertainty due to the Animal Efficacy Rule. 7 Under this guidance, efficacy is established through animal models rather than human populations for ethical reasons. To date, no novel products and only a two new indications of previously licensed products have been approved under the Animal Efficacy Rule. 8 Moreover, many threats do not yet have proven animal models available. 9 When models exist, they only provide a rough approximation 2 DiMasi and Grabowski, 2007. Note that the biologics in the data set include monoclonal antibodies and therapeutic recombinant proteins, and do not include vaccines. 3 Parker, 2007. 4 Dimasi et al., 2009. 5 Milken Institute, 2006. 6 Matheny et al., 2007. 7 In May 2002, the FDA published “Approval of Biological Products when Human Efficacy Studies are not Ethical or Feasible” [21 CFR 601 Subpart H, as well as 21 CFR 314 Subpart I for New Drugs]. This rule is more commonly known as the “Animal Efficacy Rule” or the “Animal Rule.” 8 Tucker, 2009. Pyridostigmine bromide was approved in 2004 as a pretreatment against soman, a chemical nerve agent. Hydroxycobalamin was approved under the Animal Efficacy Rule as a drug used to treat smoke inhalation as a countermeasure against cyanide. 9 Gronvall et al., 2007.

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APPENDIX E 121 of the efficacy of the treatment in human populations, as countermeasures developed using the Animal Efficacy Rule will remain untested in humans until used during an emergency. 10 Based on stakeholder feedback, the Animal Efficacy Rule pathway is seen as uncertain and riddled with risk by both large and small MCM developers, despite recent efforts by the FDA to provide additional guidance on the matter. 11 Furthermore, several interviewees questioned whether the FDA has enough focused resources and funding to manage MCM reviews vis- à-vis other products. SMEs also questioned whether reviewers in the Center for Biologics Evaluation and Research (CBER) and the Center for Drug Evaluation and Research (CDER) have the necessary public health and national security perspective to understand the unique requirements and context of MCM products required to evaluate the trade-offs and exceptions that come into play with their development. Engaging Experienced Industry Players Has Proven Challenging The mission inherently requires close collaboration between the USG and private sector companies. While stakeholder opinions varied about the type of industry participation needed, the majority believed that some level of experienced pharmaceutical engagement, particularly in late stage development, was a necessity to building a successful MCM development enterprise. Because of their size, smaller companies simply do not have the breadth of skills in development chemistry, process chemistry, manufacturing, etc., that can be found in larger firms, and this is a critical gap. As one subject matter expert (SME) explained, “When you’re developing a new chemical entity and a new manufacturing platform that the Food and Drug Administration [FDA] is not familiar with, you need that experience. It’s not that the smaller guys aren’t smart enough, it’s just that it’s a game of breadth, not depth.” Despite the need for seasoned industry expertise, the MCME has had difficulty attracting significant interest from mid- and large-size pharmaceutical firms, 12 whose main barriers to entry are the high opportunity costs for potential time and money spent on CBRN MCM development activities in an industry where, according to one industry expert, “opportunity cost is everything.” Unfortunately, the market 10 Matheny et al., 2007. 11 Guidance for Industry: Animal Models—Essential Elements to Address Efficacy Under the Animal Rule, 2009. 12 Matheny et al., 2007.

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122 EMERGENCY MEDICAL COUNTERMEASURES ENTERPRISE opportunity that industry perceives for medical countermeasures is quite small, particularly for CBRN countermeasures, compared with the scale of other market segments that they address. As such, most MCM developers to date have been smaller biotech companies with fewer alternatives for development programs. As one SME explained, “While all potential partners consider funding as an incentive for participation, anticipated MCM funding is more likely to attract smaller biotech companies and academic labs.” This is largely because the opportunity costs of small biotechs for undertaking MCM development activities are much lower than that of large pharmaceutical companies. Inconsistent funding from the USG poses additional uncertainty and risk. More specifically, in FY09, $275 million was transferred out of the SRF for advanced research and development and $137 million was transferred out for pandemic influenza preparedness. In FY10, $305 million was transferred out of the BioShield Strategic Reserve Fund (SRF) for advanced research and development while $304 million was transferred out to the National Institute of Allergy and Infectious Diseases (NIAID). 13 Current FY11 requests would transfer $476 from SRF for advanced development. Transferring funds away from the SRF leaves less pull funding available for MCM acquisition and, more importantly, sends a negative signal to current and potential industry partners regarding the government’s commitment to the MCM development mission. Congress has not articulated plans to reauthorize the SRF, creating unsettling market uncertainty for companies whose research and development programs are not expected to reach maturity until after the SRF is due to expire in FY2013. 14 Ongoing uncertainties about the level of annual appropriations make it difficult for MCME agencies to effectively manage multiyear MCM research and development programs and engage industry partners in the mission. Moreover, program managers are typically unable to fully fund all projects and build pipelines of concurrent candidates. 15 Because no one entity is necessarily responsible for funding end-to-end MCM development, it is important to ensure funding dollars are appropriately distributed across all stages of the product development pipeline. Despite these challenges, most subject matter experts still believe that seasoned industry firms can play a role in MCM development, 13 Optimizing Industrial Involvement with Medical Countermeasure Development: A Report of the National Biodefense Science Board, 2010. 14 Matheny et al., 2007. 15 Tucker, 2009.

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APPENDIX E 123 though one representative from a leading pharmaceutical company representative noted, “If you were to search through our corporate strategy, the words ‘biodefense’ and ‘medical countermeasure’ will never appear.” Stakeholders agreed that successful MCM development depends on establishing a breadth of capabilities not typically found in most small companies. A refined MCME business model may make the CBRN MCM opportunity more appealing to experienced pharmaceutical companies. CURRENT UNITED STATES GOVERNMENT APPROACH TO MCM DEVELOPMENT The Enterprise’s CBRN program investments to date have primarily focused on biological threats. The approach that has been followed to date for developing MCMs against these threats can be summarized as follows: • Policy decisions on how MCM products against biological threats will be used emphasize post-event response with stockpiled MCM products. These policies are described in the PHEMCE Strategy and Implementation Plan of 2007. 16 Such policies reinforce a perception that a successful developer would achieve only fixed, small volumes of MCM sales. • The MCME is largely seeking to develop new MCM products (vaccines and therapeutics) for a diverse set of requirements (including special needs populations) against 14 agents for which MTDs and PTAs have been issued, most of which are for biologic threats. 17 Coordinating funding and development for these development projects across multiple USG agencies is a complex task. Recent progress has been made toward gaining cross-agency organization in an effort to help define and manage a single “Integrated Portfolio” for USG Biodefense MCM development. 18 This approach is intended to coordinate the biodefense MCM pipelines currently managed by the Biomedical Advanced Research and Development Authority (BARDA), NIAID, Department of 16 PHEMCE Strategy and Implementation Plan, 2007. 17 Ibid. 18 Optimizing Industrial Involvement with Medical Countermeasure Development: A Report of the National Biodefense Science Board, 2010.

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170 EMERGENCY MEDICAL COUNTERMEASURES ENTERPRISE • Relevance: Provide services in line with needs of inexperienced biodefense companies • Incentives: Provide services to expedite R&D of promising biotechnologies BIBLIOGRAPHY AdvancedMarkets Working Group. 2005 (April 7). Making markets for vaccines. Center for Global Development. Andre, F. E. 2002. How the research-based industry approaches vaccine development and establishes priorities. Developments in Biologicals 110:25-29. Audretsch, D. B., B. Bozeman, K. L. Combs et al. 2002. The economics of science and technology. Journal of Technology Transfer 27:155-203. Baker, D. 2004 (Sept. 22). Financing drug research: What are the issues? Center for Economic and Policy Research. BARDA Authorities Assessment. 2008 (Sept. 12). HHS Transition Package. Berndt, E., and J. Hurvitz. 2005. Vaccine advance-purchase agreements for low-income countries: Practical issues. Health Affairs 24(3):653-665. Berndt, E., et al. (incl. R. Levine). 2006 (Aug.). Advance market commitments for vaccines against neglected diseases: Estimating costs and effectiveness. Center for Global Development Working Paper No. 98. Brogan, D., and E. Mossialos. 2006 (Aug.). Applying the concepts of financial options to stimulate vaccine development. Nature Reviews Drug Discovery 5:641-647. Challenge and Opportunity on the Critical Path to New Medical Products. 2004 (March). FDA Critical Path Initiative. Chesbrough, H. 2003. Open innovation: The new imperative for creating and profiting from technology. Harvard Business School Publishing Company.

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APPENDIX E 171 Commercial Spaceflight Federation. 2009 (June 29). Commercial spaceflight in low earth orbit is the key to affordable and sustainable exploration beyond. Input into the Review of U.S. Human Space Flight Plans Committee. Critical Path Opportunities Report. 2006 (March). FDA Critical Path Initiative. CSC News Release. 2008 (June 5). CSC’s DynPort Vaccine Company to continue plague vaccine development. DARPA Grand Challenge Website. (accessed March 7, 2010). DiMasi, J. A., and H. G. Grabowski. 2007. The cost of biopharmaceutical R&D: Is biotech different? Managerial and Decision Economics 28:469-479. DiMasi, J., et al. 2010 (Feb. 3). Trends in risks associated with new drug development: Success rates for investigational drugs. Nature Publishing Group: Clinical Pharmacology and Therapeutics. Doremus, P. 2008 (July 17). The R&E tax credit: Rationale, structure and performance. The National Institute of Standards and Technology, Strategic Planning & Economic Analysis Group. Fuerst, T. et al. 2009. Ensuring biologics advanced development and manufacturing capability for the United States Government—A summary of key findings and conclusions. Pittsburgh, PA: UPMC. GAVI Presentation. Accelerating the development and use of new vaccines: Economic and financial incentives. GAVI Press Release. 2009 (Oct. 12). Update: Pneumococcal AMC receives four offers from vaccine manufacturers. http://www.vaccineamc.org/ updateoct12_09.html. Global Health Security Initiative Website. 2010. (accessed March 7, 2010).

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172 EMERGENCY MEDICAL COUNTERMEASURES ENTERPRISE Global Security Newswire. 2010 (Feb. 26). Former HHS official backs home kits for biodefense. Gottron, F. 2007 (June 11). Project BioShield: Appropriations, acquisitions, and policy implementation issues for Congress. Washington, DC: Congressional Research Service. Gottron, F., and E. Fisher. 2004 (Aug. 27). Project BioShield: Legislative history and side-by-side comparison of H.R. 2122, S. 15, and S. 1504. Washington, DC: Congressional Research Service. Grabowski, H. 2005 (May/June). Encouraging the development of new vaccines. Health Affairs 24(3):697-700. Grabowski, H. 2005. Increasing R&D incentives for neglected diseases: Lessons from the Orphan Drug Act. In Cambridge University Press conference volume, edited by J. Reichman. Pp. 457-480. Grabowski, H., D. Ridley, and J. Moe. 2009. Encouraging innovative treatment of neglected diseases through Priority Review Vouchers. Prescribing Cultures and Pharmaceutical Policy in the Asia-Pacific. Pp. 347-365. Gronvall, G., et al. on behalf of the Alliance for Biosecurity. 2007. The FDA Animal Efficacy Rule and biodefense. Nature Biotechnology. Guidance for Industry: Animal models—Essential elements to address efficacy under the Animal Rule. 2009 (Jan.). HHS, FA, CDER, CBER. Hatchett, R. 2009 (Oct. 27). Alternative models for medical countermeasures development. HHS PHEMCE stakeholders workshop 2007 report. 2008 (July/Aug.). Biomedical Advanced Research and Development Authority. Higgins, M., and S. Graham. 2009 (Oct.). Balancing innovation and access: Patent challenges tip the scales. Science 326(5951):370-371. Hsu, J., and E. Schwartz. 2003 (Oct.). A model of R&D valuation and the design of research incentives. NBER Working Paper 10041.

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APPENDIX E 173 Hu et al. 2007 (March 12). The innovation gap in pharmaceutical drug discovery and new models for R&D success. Kellogg School of Management. Inglesby, T. 2008. Building an effective government–private sector partnership for biodefense. PHEMCE Stakeholders Workshop. IOM (Institute of Medicine). 2002. Protecting our forces: Improving vaccine acquisition and availability in the U.S. military Washington, DC: The National Academies Press. IOM 2004. Giving full measure to countermeasures: Addressing problems in the DoD program to develop medical countermeasures against biological warfare agents. Washington, DC: The National Academies Press. IOM. 2008. Addressing the barriers to pediatric drug development:. Workshop summary. Washington, DC: The National Academies Press IOM. 2009. Breakthrough business Models: Drug development for rare and neglected diseases and individualized therapies. Washington, DC: The National Academies Press. IOM. 2010 (Feb.) The Public Health Emergency Medical Countermeasures Enterprise: Innovative strategies to enhance products from discovery through approval. An Institute of Medicine Workshop. Klotz, L. C., and A. Pearson A. 2009. BARDA’s budget. Nat Biotechnol 27(8):698-699; author reply 699. Kremer, M. 2000 (May 24). Creating markets for new vaccines, Part 1: Rationale. The Brookings Institute and NBER. Kremer, M. 2000 (May 24). Creating Markets for New Vaccines. Harvard University, Brookings Institute, and NBER. Lightfoot, N. 2009 (Nov.). The Global Health Security Initiative (GHSI) Public Health Emergency Medical Countermeasures (MCM) Workshop. U.S. Department of Health and Human Services. LINUX Website. (accessed March 7, 2010).

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174 EMERGENCY MEDICAL COUNTERMEASURES ENTERPRISE Matheny, J., et al. 2006. Drug and vaccine development for infectious diseases: The value of Priority Review Vouchers. Clinical Pharmacology and Therapeutics 85(6):571-572. Matheny, J., et al. 2007. Incentives for biodefense countermeasure development. Biosecur Bioterror 5(3):228-238. Matheny, J., M. Mair, and B. Smith. 2008. Cost/success projections for US biodefense countermeasure development. Nat Biotechnol 26(9):981- 983. Maurer, S. 2005. The right tools: Designing cost-effective strategies for neglected disease research. Goldman School of Public Policy, University of California–Berkeley. Maurer, S. 2009. Squeezing value from Homeland Security research: Designing better R&D incentives. In WMD Terrorism: Science and Policy Choices. The MIT Press. McKenna, F. 2009 (July 20). Commercial launch faces economic reality, again. From International Launch Services. Space News. Merck Newsroom. 2009 (Dec. 27). Merck & Co. to acquire Avecia Biologics. Milken Institute. 2006 (Oct.). Financial innovations for accelerating medical solutions. Milken Institute Publication. Monath, T. Developing products against biological and emerging threats: Progress, pitfalls and set-backs. KPCB Presentation. Moran, M. 2005. A breakthrough in R&D for neglected diseases: New ways to get the drugs we need. PLoS Medicine 2(9):0828-0832. Moran, M. 2006 (Sept.). The new landscape of neglected disease drug development. Medicines for Malaria Venture. Munos, B. 2006 (Aug. 18). Can open-source R&D reinvigorate drug research? Nature Reviews Drug Discovery; Perspectives.

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APPENDIX E 175 Munos, B. 2009. Lessons from 60 years of pharmaceutical innovation. Nature Reviews Drug Discovery. pp. 959-968. Munos, B., and W. Chin. 2009 (Dec.). A call for sharing: Adapting pharmaceutical research to new realities. Science Translational Medicine 1(9). Optimizing industrial involvement with medical countermeasure development: A report of the National Biodefense Science Board. 2010 (Feb.). Department of Health and Human Services. Orphan Drug Act. 1983. Public Law 97-414. Parker, G. 2007. HHS Public Health Emergency Medical Countermeasures Enterprise implementation plan for chemical, biological, radiological and nuclear Threats. Federal Register 72(77):20117-20128. PHEMCE Strategy and Implementation Plan. 2007. Department of Health and Human Services, Assistant Secretary for Emergency and Preparedness Response. PHEMCE Workshop 2008 & BARDA Industry Day Report. 2008 (September). Biomedical Advanced Research and Development Authority. Plahte, J. 2005 (Jan.). Tiered pricing of vaccines: A win-win-win situation, not a subsidy. Lancet Infect Dis 5:58-63. Radcliffe, S. 2008. Strategies and suggestions: Developing and sustaining a biodefense industry. PHEMCE Stakeholders Workshop. Report on Biological Warfare Defense Vaccine Research & Development Programs (Top Report). 2001. Department of Defense. S. 3678: Pandemic and All-Hazards Preparedness Act. 2005-06. 109th Congress. Scannon, P. 2008 (June). A realistic path to future medical countermeasure development and acquisition for the Strategic National Stockpile.

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176 EMERGENCY MEDICAL COUNTERMEASURES ENTERPRISE Scannon, P. 2008. Strategies and suggestions for developing and sustaining a biodefense industry: A focus on medical countermeasures. PHEMCE Stakeholders Workshop. Schacht, W. 2005 (May 6). Bioterrorism countermeasure development: Issues in patents and homeland security. CRS Report to Congress. Schacht, W., and J. Thomas. 2007. Bioterrorism countermeasure development: Issues in patents and homeland security. Washington, DC: Congressional Research Service. Schoonmaker, M. 2005 (March 9). From bench to bedside: The role of Health and Human Services (HHS) in the evaluation of new medical products. CRS Report to Congress. Touse, A., and H. Kettler. 2004 (March 9). Advance price or purchase commitments to create markets for treatment for diseases of poverty: Lessons from three policies. Bulletin of the World Health Organization 84(4). Tucker, J. 2009. Developing medical countermeasures: From BioShield to BARDA. Drug Development Research 70(4):224-233. White House’s Homeland Security Presidential Directive 18. 2007 (Feb. 7). White House Office of the Press Secretary. Witty, A. 2010 (Jan.). Open labs, open minds: Breaking down barriers to innovation and access to medicines and vaccines in the developing world. From GlaxoSmithKline—Remarks delivered to the Council on Foreign Relations, New York. Zerhouni, E. 2009 (Dec.). Peer-to-peer sharing spurs scientific innovation. Science Translational Medicine 1.

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APPENDIX E 177 LIST OF INTERVIEWS The following is a list of individuals who were interviewed by PRTM for the purpose of this White Paper. Affiliations listed reflect the individuals primary association as of the date of the interview. Jennifer B. Alton, Bavarian-Nordic Marguerite Baxter, Novartis Ernst Berndt, MIT Sloan School of Management Luciana Borio, HHS/FDA Carla Botting, Malaria Vaccine Initiative Mike Callahan, DARPA Francesca Cook, PharmAthene Jodie Curtis, Alliance Secretariat Jeffrey Fu, Merck Thomas Fuerst, HHS/ASPR/BARDA John Grabenstein, Merck; National Biodefense Science Board Henry G. Grabowski, Duke University Maureen Hardwick, Alliance for Biosecurity Richard Hatchett, HHS/NIH/The White House Robert House, DynPort Vaccine Company Gerry Kovacs, HHS/ASPR/BARDA Michael Kurilla, HHS/NIH Carol Linden, HHS/ASPR/BARDA Boris D. Lushniak, HHS/FDA Ronald Manning, HHS/ASPR/BARDA Jerry Middleton, Elusys Therapeutics Thomas P. Monath, Kleiner Perkins Caufield & Byers Bernard Munos, Eli Lilly David Noll, Bavarian-Nordic Linda Nyari, PATH Joanna Prasher, HHS/ASPR/BARDA Rino Rappuoli, Novartis

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178 EMERGENCY MEDICAL COUNTERMEASURES ENTERPRISE John H. Rex, AstraZeneca David Ridley, Duke University Robin Robinson, HHS/ASPR/BARDA Eric Rose, Siga Technologies Phillip Russell, Sabin Vaccine Institute Jerry Sadoff, AERAS Patrick J. Scannon, Xoma; National Biodefense Science Board Bradley Smith, UPMC Center for Biosecurity CONTACT INFORMATION Michael Mair, MPH Program Analyst Policy, Planning, and Requirements Division Office of the Assistant Secretary for Preparedness and Response Department of Health and Human Services Michael.Mair@hhs.gov 202-260-1343 James Guyton Principal PRTM Management Consultants, LLC 1750 Pennsylvania Avenue NW Suite 1000 Washington, DC 20006 jguyton@prtm.com 410-428-3259 Hannah McClellan Associate PRTM Management Consultants, LLC 1750 Pennsylvania Avenue NW Suite 1000 Washington, DC 20006 hmcclellan@prtm.com 617-680-4500

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APPENDIX E 179 Fanni Li Consultant PRTM Management Consultants, LLC 1750 Pennsylvania Avenue NW Suite 1000 Washington, DC 20006 fli@prtm.com 781-526-8191

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