Drugs and Vaccines for Developing Countries

Forthcoming in the Oxford Handbook on the Economics of the Biopharmaceutical Industry, this paper describes the context of the problem of access to medicines in developing countries. The authors detail policies and proposals intended to increase access to both ‘global’ and ‘neglected’ diseases, including pricing, compulsory licensing, donations and ‘push’ and ‘pull’ mechanisms to stimulate R&D.

The world faces many challenges in addressing the health needs of the poorest in middle- and low- income countries. The economic issues that affect access to pharmaceuticals differ depending on whether the medicine treats a ‘global disease’ (one with a substantial, existing market in high-income countries) or a ‘neglected disease’ (one that largely afflicts only people in low-income countries). Medicines for global diseases widely available in richer countries often are out of reach in poorer countries for a variety of reasons, from infrastructure/governing insufficiencies to low personal incomes. For neglected diseases, subsidies and policies to mitigate risk are needed to encourage for-profit companies to develop effective medicines that even then may be unaffordable.

Much has changed over the past decade. Multinational companies (MNCs) in partnership with academia, not-for-profits, governments and foundations have increased funding and effort to develop new technologies for HIV/AIDS, TB, malaria and some other tropical diseases. Local drug and vaccine companies in emerging markets are investing resources in innovative solutions for neglected diseases as they strive to evolve from generic producers into R&D-based companies. Government and philanthropic funding increase product availability for some global disease products. Economic growth in some emerging market countries increases the attractiveness of those markets for some MNCs, which are exploring innovative strategies to expand sales and increase product availability. At the same time, MNC leadership is pursing approaches that are both commercially viable and able to make a substantive contribution to global health. Advocacy groups actively monitor what companies are doing, providing additional motivation.

Adrian Towse has collaborated with outside experts in preparing a chapter that  addresses these issues in the  forthcoming Oxford Handbook on the Economics of the Biopharmaceutical Industry. The authors describe the context of the problem of insufficient affordable medicines in developing countries and detail policies and proposals intended to increase access to global medicines by lowering prices, including differential pricing, compulsory licensing and donations. With respect to neglected diseases, they examine policies intended to stimulate development of new medicines by reducing company-born costs and risks and/or expanding the expected revenue for the manufacturer by increasing product demand. In particular, they describe ‘push’ mechanisms that subsidize research inputs and ‘pull’ mechanisms that reward research output.

The authors urge that both current and future initiatives be based solidly on a mix of theory and empirical evidence, as discussed in the paper. Since many programmes aimed at improving R&D and access are relatively recent, they believe it is too soon to ascertain which mix of approaches is optimum and under which circumstances. Continuing analysis of specific programs and initiatives, then, is essential to understanding which policies and programs work well and which do not.

Towse, A., Keuffel, E., Kettler, H.E. and Ridley, D.B.  Drugs and vaccines for developing countries. In Danzon, P. and Nicholson, S. Oxford handbook on the economics of the biopharmaceutical industry. Oxford: Oxford University Press.  (forthcoming).