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Introduction

Background

In the first months of its existence, the members of the Forum on Emerging Infections worked to shape clusters of issues that they considered fundamental to the Forum's rationale and therefore central to its work. At the top of the list were questions about what technologies would be needed to address emerging infections, who would determine and articulate those needs, how the necessary technologies would be produced and by whom, what would motivate and support that production, and in what ways all these matters might be affected by situations of urgency.

Consensus has evolved over the past few years that emerging infectious diseases will require a range of responses, many unanticipated, that will surpass the capacities of either the public health sector or the private industrial sector working alone. Yet, at the same time that collaboration between those two sectors is seen as a sine qua non, their mandates are seen as quite divergent. And, although there is also consensus that special energy must be dedicated to somehow bridging those mandates, there is little unanimity about what sorts of bridges might work best.

For both sectors, economics is a fundamental matter, even though constituencies and demands for accountability differ. The public sector must obtain adequate budgetary allocations for its work, allocations that depend at least in part on the constituencies it can marshal in support of that work; its incentives derive from getting the public health agenda right and responding satisfactorily to the appropriate populations. And, while profitability is not part of its mandate, the public sector is increasingly required to be attentive to costs. The private industrial sector must obtain adequate financial rewards for its constituencies, that is, those who invest in its ventures. Mobilization of that investment depends importantly on profits from the markets for its products. If there are disincentives either to those markets or to satisfactory levels of reward, offsetting incentives are required. Although these do not have to be purely economic, they must ultimately have some sort of economic effect.



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--> Introduction Background In the first months of its existence, the members of the Forum on Emerging Infections worked to shape clusters of issues that they considered fundamental to the Forum's rationale and therefore central to its work. At the top of the list were questions about what technologies would be needed to address emerging infections, who would determine and articulate those needs, how the necessary technologies would be produced and by whom, what would motivate and support that production, and in what ways all these matters might be affected by situations of urgency. Consensus has evolved over the past few years that emerging infectious diseases will require a range of responses, many unanticipated, that will surpass the capacities of either the public health sector or the private industrial sector working alone. Yet, at the same time that collaboration between those two sectors is seen as a sine qua non, their mandates are seen as quite divergent. And, although there is also consensus that special energy must be dedicated to somehow bridging those mandates, there is little unanimity about what sorts of bridges might work best. For both sectors, economics is a fundamental matter, even though constituencies and demands for accountability differ. The public sector must obtain adequate budgetary allocations for its work, allocations that depend at least in part on the constituencies it can marshal in support of that work; its incentives derive from getting the public health agenda right and responding satisfactorily to the appropriate populations. And, while profitability is not part of its mandate, the public sector is increasingly required to be attentive to costs. The private industrial sector must obtain adequate financial rewards for its constituencies, that is, those who invest in its ventures. Mobilization of that investment depends importantly on profits from the markets for its products. If there are disincentives either to those markets or to satisfactory levels of reward, offsetting incentives are required. Although these do not have to be purely economic, they must ultimately have some sort of economic effect.

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--> A large economic challenge to market demand is presented by the inability of significant numbers of potential customers for a given product to pay its full cost; this in turn constrains the ability of private investors in research and development to recover their investment and make a profit. Returns to investment and profit-making are also affected by other costs, for instance, responding to regulatory requirements and protecting against liability or compensating claims, particularly when any of these are extraordinarily unpredictable. All these costs are taken into account when private developers craft portfolio strategies and scrutinize investment alternatives. Furthermore, and very importantly, companies invariably assess costs, risks, and benefits relative to one another. Take, for instance, the case of vaccines for malaria and AIDS, two very complex infectious disease categories that entail exceptionally high levels of R&D risk. A company must compare potential payoff from investment in a malaria vaccine for a large market of low-income consumers with a correspondingly low per-dose profit), with potential payoff from investment in an AIDS vaccine (for a smaller market of consumers who either have relatively high incomes or may be able to rely on health insurance or public-sector subsidy for drug purchase). An increasingly germane issue has to do with the costs consumers and providers are able and willing to cover and, in the era of managed care, what technological investments will generate the biggest savings to those who provide health services. A crucial subset of concern has to do with industry response to health problems that may be critical but are of such relatively small scale that the market potential they represent is either not apparent or is unappealing in terms of prospective R&D investment. This lack of appeal may prevail even when the benefits from solutions to the health problems in question go beyond prevention and cure of diseases in individuals, such that they also have considerable benefits for the health of the public and, by extension, the well-being of the society as a whole. From this perspective, such technologies can be thought of as "social products," material goods that express important societal values but are nevertheless inefficiently or inadequately represented by market forces. Of these, a significant group—vaccines, contraceptives, pharmaceuticals for managing drug addiction, and diagnostics and therapies for at least some infectious diseases, including sexually transmitted diseases—raises special challenges to decisions about R&D investment. The challenges are primarily economic but in some cases, cultural and sociopolitical factors become weighty and even determining.1 The social products problem becomes acute when the technology at issue responds primarily to requirements of the less developed countries, as has been the case with many infectious diseases. In 1992, R&D claimed just 3.4 percent of the world's total expenditure on health. Of the almost $56 billion invested in health research in 1992, approximately 95 percent was invested in health problems that primarily affect the industrialized world; just 5 percent was devoted to the health needs of developing regions. Combined research and development spending on the three leading disease conditions in developing nations—pneumonia, diarrheal disease, and tuberculosis, diseases accounting for almost one-fifth of the entire global burden of disease—totalled $133 million, or 0.2 percent of the world's

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--> entire health R&D spending.2 Historical, socioeconomic, and geographical distances may once have served to justify that extreme imbalance; they make little sense now, as pressures from epidemiological and demographic mobility grow and multiply. The Workshop These core concerns led the Forum members to ask more specific questions about the present and future challenges of infectious diseases, questions then used to organize this workshop. They were: What is the public health agenda for emerging and reemerging infections in those areas where specific responses will be required from industry, and what products are needed? Of those, which product areas are already a focus of significant industry research and development (R&D) efforts and which product areas are, in effect, "orphans," unlikely to be developmental priorities because their market future is somehow unappealing, especially if they present complex and costly technical challenges? What approaches have been used to assure the development of products that are not profit makers but are nonetheless essential to the health of some significant population, that is, "social products"? Which of these approaches might reward further exploration as a way to deal specifically with the issue of emerging infectious diseases? Because the ramifications of these questions are so varied and extensive, the decision was made to take case material as a point of departure for analysis and discussion. The primary case chosen was the Children's Vaccine Initiative (CVI), with case material on the Malaria Vaccine Development Board and International AIDS Vaccine Initiative added to expand the basis for discussion. Conceptualized in the late 1980s, launched subsequent to the World Summit for Children in late 1990, and a continuing focus of international effort since, the CVI has accumulated enough history to provide many lessons about strategies, tactics, and issues, all potentially valuable for thinking about how to attain a reasonable level of preparedness for infectious diseases as they emerge and re-emerge at some level of compelling concern.