Neglected Disease Research and Development (cont.)

Innovative Developing Countries

W

hile global health R&D has historically been driven by industrialised countries, Innovative Developing Countries (IDCs) have recently emerged as a growing force in the field of neglected diseases. After decades of investment in education, research infrastructure and manufacturing, IDCs are developing the capacity to conduct high quality R&D for products relevant to the needs of their own populations, and to fill gaps where market incentives for R&D in the West may fall short. This year, G-FINDER includes official data from public funders in three IDCs (Brazil, India, and South Africa) and a brief snap-shot of China‘s R&D funding.

Government funding in IDCs comes mainly from science and technology departments and ministries. In Brazil, this role is played by the Department of Science and Technology within the Ministry of Health; in India, by the Department of Health Research through the Indian Council of Medical Research (ICMR); and in South Africa, by the Department of Science and Technology. These bodies chiefly fund national institutes and research centres but also universities and private companies. Research capacity funded by these agencies has paved the way for numerous North-South collaborations, with several IDC organisations working in partnership with Product Development Partnerships (PDPs) to develop new products for neglected diseases. To give just three examples:

• Brazil’s Oswaldo Cruz Foundation (Fiocruz)/Bio-Manguinhos and Butantan Institute partnered with the Human Hookworm Vaccine Initiative to develop and manufacture the first multivalent recombinant vaccine against human hookworm infection
• India’s International Centre for Genetic Engineering and Biotechnology (ICGEB) and Bharat Biotech are developing a malaria vaccine for P.vivax with PATH’s Malaria Vaccine Initiative (MVI)
• The Serum Institute of India has partnered with PATH’s Meningitis Vaccine Program to develop a group A meningococcal conjugate vaccine.³⁷

It is important to note that dollar-for-dollar comparisons of R&D investments in IDCs and industrialised countries can be misleading, since IDC investment tends to have a higher per dollar impact. Researchers and product developers in IDCs generally have access to less expensive R&D inputs, including well-trained human capital, a larger pool of “naïve” subjects  for clinical trials, and well developed IT systems for processing and managing clinical data.

Funding trends for the IDCs (South Africa, Brazil and India) were quite different from those of HIC funders, with IDCs spending over one-third of their funding (35.1%, $26.9m) on dengue, kinetoplastids and leprosy, compared to 40.4% ($30.9m) on HIV/AIDS, TB and malaria. Year-on-year IDC funding trends cannot, however, be reasonably compared due to the size and focus of Indian funding, which is captured in this report for the first time. For instance, inclusion of Indian data has shifted dengue and leprosy up the IDC funding chart, while helminth infections no longer appear as the top priority, despite funding remaining steady at $2.5m in both 2007 and 2008.

Brazil

India

China

Philanthropic funders

Funding from the philanthropic sector rose an impressive 33.1%, from $538.3m in 2007 to $716.5m ($741.8m) in 2008, underlining the central importance of philanthropists to neglected disease R&D funding. The vast majority of this increase (92.5%) was due to increased funding by the Bill & Melinda Gates Foundation, which increased its investment by 36.5% ($164.9m); with a further $8.9m reflecting data from new survey participants.

Funding continued to be highly concentrated, with two organisations – the Bill & Melinda Gates Foundation and the Wellcome Trust – providing 94.6% of total philanthropic funding. Funding from the general public, already very modest, decreased further in 2008, likely due to the global financial crisis.

The huge upswing in Gates Foundation funding, in particular, was reflected in increased funding for virtually all diseases (often in the tens of millions of dollars), with the exception of kinetoplastids and the diarrhoeal diseases.

Philanthropic funding continued to focus strongly on HIV/AIDS, TB and malaria (69.7% of total philanthropic funding in 2007, 72.1% in 2008), with several diseases receiving less than 1% of philanthropic funding each, including leprosy, salmonella infections, Buruli ulcer and rheumatic fever. Investment into platform technologies increased four-fold on 2007 funding (albeit from a very low base). This increase was largely driven by Gates Foundation investments, including a boost to early stage work via the Grand Challenges Exploration initiative, and support for the development of needle-free and thermostable vaccines by the Program for Appropriate Technology in Health (PATH).

Philanthropic funders directed an even higher proportion of their funds via PDPs and intermediaries (55.4% in 2008 compared to 50% in 2007), rather than through direct grants to researchers and developers (37.8% in 2008 compared to 46.3% in 2007).

We note that philanthropic funding patterns are heavily influenced by the preferences of the predominant funder, the Bill & Melinda Gates Foundation.

Private sector funders

For confidentiality reasons, industry investments are reported as aggregate figures. Had this not been the case, individual pharmaceutical companies would again have appeared in the list of top funders in 2008, based on the size of their internal investments. ^iv

Reported industry investments increased across the board due to a greater industry response to the G-FINDER survey in 2008. However, this apparent increase masks a $23.0m decrease in investment by Year One industry participants; all of which is due to decreased SME investment, with funding from MNCs actually showing a small real increase of $0.9m

SMEs accounted for 23.6% ($86.1m) of reported industry investment in 2008, with multinational firms contributing the remainder ($279.2m, 76.4%). As would be expected, private companies predominantly invested their own funds into internal neglected disease R&D programmes, however, companies also provided around $10m in grants to neglected disease programmes conducted by external groups.

Multinational Pharmaceutical Companies (MNCs)

In 2008, MNCs invested 70.8% of their total funding into malaria, TB and dengue, with 55.4% ($154.6m) invested into malaria and TB.

Significant investments were also made into areas where neglected disease activity could be piggybacked onto commercial programmes, in particular pneumonia / meningitis, HIV/AIDS, diarrhoeal illnesses and dengue. These more ‘commercial’ neglected diseases represented 41.9% ($117.1m) of total MNC investment. Total funding for the so-called ‘most neglected diseases’ was less than 3% of industry funding with, again, no industry funding for leprosy R&D.

Significant increases in MNC funding were reported for all diseases (again largely due to increased survey participation), with the exception of the kinetoplastids.

Smaller Pharmaceutical and Biotechnology Firms (SMEs)

Survey participation by SMEs increased substantially in 2008, from 29 to 42 companies (see Annexe 4 for a full list of survey respondents), giving a far better picture of SME activity in the neglected disease R&D field. This increase in numbers (and in apparent funding) actually hides a decrease in absolute funding, with investment by Year One SME participants halving in 2008 (down from $46.2m to $22.3m), most likely due to the impact of the global financial crisis on smaller companies.

Beyond this, year-on-year trends cannot be reliably analysed, since the key driver of funding changes is the inclusion of new survey participants.

As with MNCs, smaller pharmaceutical firms focused on HIV/AIDS, TB and malaria and overlapping commercial diseases such as bacterial pneumonia /meningitis and salmonella. In the case of bacterial pneumonia / meningitis, the entire funding increase was due to new survey respondents, lifting reported SME funding for this disease from $0.6m in 2007 to $18.6m in 2008.

In-Kind Contributions

In addition to their direct R&D spend, companies conducting neglected disease R&D incur a range of other costs, such as infrastructure costs and costs of capital. These costs have not been included in G-FINDER due to the difficulty of accurately quantifying or allocating them to neglected disease programmes. Companies also provide in-kind contributions that are specifically targeted to neglected disease R&D but that cannot easily be captured in dollar terms, as seen in Table 20. We note that while some companies have nominated areas where they provide such contributions, others wished to remain anonymous. Although difficult to quantify, these inputs nevertheless represent a substantial value to their recipients and a significant cost to companies.

Funding by organisation

Global investment in neglected disease R&D in 2008 was again dominated by a small number of organisations, with 12 groups, including aggregate pharmaceutical industry, providing more than 85% (87.2%) of global funding. This represents a slight dilution of funding concentration over 2007, when 12 groups accounted for 89.3% of funding. This change is not a reflection of decreased investments by the top 12 funders overall, but rather a consequence of a greater total funding figure due to the increase in G-FINDER survey participation in 2008.

The ranking of the top 12 funders changed only slightly in 2008, with two organisations once again accounting for nearly 60% of global funding for neglected disease R&D (59.3% in 2007; 57.4% in 2008). We also note that pooled industry contributions ranked third in both years, with reported funding from this sector increasing by $133.4m (57.5%) in 2008, due chiefly to increased survey participation.

Most top 12 organisations from 2007 either decreased their funding in 2008, or made only relatively modest increases; however, this pattern was masked by the $164.9m increase in funding from the Bill & Melinda Gates Foundation. For instance, Irish Aid decreased its investments from $24.3m in 2007 to $8.4m in 2008, with PDPs such as International AIDS Vaccine Initiative (IAVI) and International Partnership for Microbicides (IPM) bearing the brunt of these cuts. This pushed Irish Aid out of its 11th place in 2007 to a ranking of 26th in 2008. Lesser, but still substantial, reductions were made by the Dutch Ministry of Foreign Affairs, Institut Pasteur and US Department of Defense. The global financial crisis is likely to have played a part in some of these decisions.

We note that some organisations outside the top 12 increased their investments. For instance, the Spanish Ministry of Foreign Affairs and Cooperation for Development (MAEC) more than tripled its investment ($5.6m in 2007; $16.0m in 2008), bringing it from 28th place in 2007 to become the 16th largest global donor in 2008. Increased investments by the MAEC were primarily in the form of contributions to PDPs such as IAVI, DNDi, MMV and IPM. The ICMR just missed out on the top 12 list, with a substantial $19.5m investment into neglected disease R&D.

Funding Flows

Organisations who invest in neglected disease R&D disburse funds in different ways. Self funders, such as pharmaceutical companies, invest chiefly into their own internal research facilities and programmes. Pure funders, such as the Bill & Melinda Gates Foundation, provide grants to third parties but do not conduct research themselves – this is often called extramural funding. Still other organisations such as the NIH and the UK Medical Research Council (MRC) use a mixed model, providing extramural funding to others in addition to funding their own internal research programmes.

While a sizeable portion of extramural funding is disbursed directly to researchers and developers such as academic research institutions and universities, R&D funding is increasingly being channeled through PDPs and intermediaries, who then disburse these funds to other researchers.

For the purposes of this report, PDPs are defined as public health driven, not-for-profit organisations who typically use private sector management practices to drive product development in conjunction with external partners. PDPs tend to focus on one or more neglected diseases and aim to develop products suitable for developing country use. While their primary goal is the advancement of public health rather than commercial gain, they generally use industry practices in their R&D activities, for instance portfolio management and industrial project management. Additionally, many PDPs conduct global advocacy to raise awareness of their target neglected diseases.⁴⁷

Intermediaries also receive R&D funds and are dedicated to a specific non-profit research aim but, unlike PDPs, they more often represent a consortium of organisations and do not normally use private sector management practices. Typical intermediary organisations are the European and Developing Countries Clinical Trials Partnership (EDCTP), a partnership of several EU and developing countries who offer a grant programme to support clinical trials for HIV/AIDS, malaria and TB. In 2008, EDCTP received $54.6m. Another intermediary, the Microbicides Development Programme (MDP), is a research partnership coordinated by Imperial College London and the UK MRC, which received $15.2m in 2008.

The figure below shows neglected disease R&D funding flows in 2008. However, these breakdowns cannot be compared with 2007 funding flows due to significant changes in industry participation in the 2008 survey (translating into a higher proportion of ‘self-funding’) and to a methodological change in handling PDPs and intermediary organisations.

The 2007 G-FINDER survey reported PDP and intermediary funding as a combined figure, however PDP funding is reported separately in 2008, while intermediary funding is combined with funding for other research and development groups. This change was made in response to funder interest in having more accurate data on the more homogeneous group of organisations defined as PDPs.

Self-funders

In 2008, self-funded R &D decreased or stayed relatively steady across the board, with the exception of the NIH and US Centers for Disease Control and Prevention (CDC), both of whom substantially increased their internal investments. (The apparent increase in industry self-funding is an artefact, as noted above).

Product Development Patnerships

Funding via PDPs increased by over $100m in 2008, from $469.4m to $580.1m (up from 23.1% of extramural funding in 2007 ⁴⁸ to 25.6% in 2008). This means that PDPs managed around one- fifth (19.6%) of total global neglected disease R&D funding in 2008. It is also important to note the influence of the NIH on overall PDP funding patterns. While the NIH is the largest funder of neglected disease R&D overall, it provides a relatively small amount of its funding (0.3% or $3.3 m) to PDPs. If the NIH is excluded, PDPs capture a far larger proportion (42.8%, $576.8m) of extramural funding.

Several PDPs saw a large increase in their funding in 2008. PATH funding increased from $38.0m in 2007 to $ 111.2 m in 2008, making it the highest funded PDP this year. Much of this was due to a $63.7m increase in grants to PATH’s Malaria Vaccine Initiative (MVI) to support the RTS,S malaria vaccine being developed with GlaxoSmithKline Biologicals, which entered phase III clinical trials in May 2009. ⁴⁹ Other PDPs who saw significant funding increases were Aeras Global TB Vaccine Foundation (Aeras), IPM, Foundation for Innovative New Diagnostics (FIND), the Sabin Vaccine Institute and the Infectious Disease Research Institute (IDRI). In contrast with these PDPs, most of whom focus on non-drug interventions, drug development PDPs including MMV, DNDi and the TB Alliance all reported funding drops in 2008, although in some cases this could reflect uneven disbursement associated with multi-year grants. We emphasise that these year-on-year trends need to be interpreted with caution, since they reflect many factors, including uneven funding disbursement, multiyear grants and progress in global portfolios. Funding may also be frontloaded at the start of clinical development programmes, tapering off towards the end of trials.

As in 2007, the centrality of PDPs varies across diseases. In 2008, PDPs managed 29.1% ($19.4m) of global helminth funding (32.5% of extramural helminth funding). However, they only captured 0.9% ($0.4m) of global salmonella funding (1.5% of extramural salmonella funding), likely reflecting the prominent role of industry in the salmonella field.

Significant increases were seen in helminth funding to PDPs, which rose from $8.3m to $19.4m; and in malaria funding, up from $105.0m to $147.4m this year (largely due to increased vaccine funding). Funding to PDPs for HIV/AIDS and TB increased by $18.4m and $26.7m respectively, mirroring the overall increase of funding for these diseases in 2008. PDPs played a bigger role in several areas in 2008, including R&D of platform technologies (delivery technologies and devices) and products for bacterial pneumonia and meningitis. In 2008, PDPs (PATH and IDRI) received 32.2% of funding dedicated to delivery technologies and devices. The Gates Foundation disbursed $9.8m (10.8% of the disease total) to PATH in 2008 to fund their portfolio of bacterial pneumonia and meningitis vaccines, continuing their history of support in this area.

In some disease areas, PDPs had a smaller presence than in 2007. For instance, kinetoplastid funding to PDPs dropped from $45.6m to $37.1m, reducing PDP’s ‘share’ of global kinetoplastid funding from 36.4% to 26.6%. This was primarily due to decreased funding of kinetoplastid programmes in FIND, iOWH and DNDi.

Discussion

Funder decisions are often driven by two central questions: Where can I best invest? How much money will be needed to succeed? Although there is often no simple answer to these questions, there are frameworks to guide investors towards the best decisions, as discussed below.

Allocation of R&D funding: where to invest

Businesses, philanthropists and governments routinely make decisions on where their funding is likely to bring the highest return on investment, be this a financial return (in the case of companies) or a health return (in the case of public and philanthropic funders).

In many health areas, the investor has a good idea of the likely impact of their investment; this is the case, for instance, with purchase of vaccines or implementation of a TB programme. However, in the R&D field, matters are complicated by scientific risk. That is, a given investment has a predictable health impact IF it results in a successful product. However, the likelihood of success varies from ‘high’ in the case of some diseases and products to ‘there is still a long way to go’ for other diseases and products. This means that funders wishing to assess the likely health return on a range of investment options will need to examine two areas: first, the potential health impact of a successful product; and second, the likelihood that such a product will eventuate. In commercial terms, they must discount for risk of failure (Please refer to G-FINDER 2007 report ⁵⁰ for more details).

The potential health impact of any investment depends on the severity of R&D need, which is in turn determined by burden of disease, disease trend, severity of product shortfall and severity of underfunding. The likelihood that a successful product will result from a suitably-sized investment depends on the state of science and type of R&D needed: these will differ dramatically from disease to disease. Some diseases have large product portfolios with promising leads in the late stages of development (e.g. malaria); others, such as Buruli ulcer have little or nothing in the way of global portfolios, and may even lack answers to the basic scientific questions that underpin cost- effective product development.

Different types of R&D also have very different development costs, ranging from the hundreds of thousands to the hundreds of millions. In general, diagnostics are far cheaper and quicker to develop than drugs, due to their relatively lower regulatory barriers and limited clinical trial requirements. For instance, a TB diagnostic is estimated to cost between $1-10m ⁵¹ and to take 3-5 years⁵² to bring to registration. Fixed-dose combinations or reformulations of existing drugs are more expensive, but far below the cost of developing novel products from scratch.

Development times can range from 7-10 years⁵³ for novel drugs and 10-12 years⁵⁴ for vector control products, and both products face high regulatory requirements. Drug trials must be undertaken in hundreds to several thousands of patients, for example phase III trials of the malaria drug, pyronaridine-artesunate, enrolled 3,533 patients in 18 countries in Africa and Asia, who were each followed up for 28 days. Phase III trials of the visceral leishmaniasis drug, paromomycin, enrolled 666 patients in India, who were followed up for six months. Pesticides and biological control products must also undergo rigorous field testing to prove safety and eficacy. As a result, vector control products are estimated to cost around $200m to $300m to develop;⁵⁴ while development of a new TB drug is estimated at $115m to $240m,⁵⁵ and of a new malaria drug at $250m.⁵⁶

These costs and trial sizes are dwarfed by the investments needed to bring a new vaccine to registration. High vaccine development costs are driven by their longer development times, the need for far larger clinical trials to establish safety and efficacy, and the higher risks associated with conducting trials on healthy children as opposed to adult patients already suffering from the disease. For instance, phase III trials of the RTS,S malaria vaccine will enrol around 16,000 children and infants in seven endemic countries in Africa, who will be followed up for least 2.5 years. As a result, vaccine development costs, including cost of failure, are estimated at $200m to $500m.⁵⁷

For all products, late stage development is far more expensive than early stage R&D. Thus, while phase III trials cost in the hundreds of millions, phase I and II product trials can be conducted for around $2m or less.⁵⁸ This offers important opportunities for investors who are keen to move the field forward, but may be unable to fund product development right through to registration.

Volume of funding: how much is needed

Investors need to distinguish between what is needed to fund a single successful product, and what is needed to fund the global portfolio for that disease. The latter is often a disconcertingly large number for funders, who could in reality make a significant difference in individual product and research areas. For instance, the Global Plan to Stop TB estimated that $9bn is needed between 2006 and 2015 for R&D of new products for TB,⁶² while The Global Malaria Action Plan estimated that $750-900m is needed per year through 2018 for the development of new tools against malaria.⁵⁶

These estimates do not exist for all neglected diseases and, when they do exist, have been calculated based on assumptions on key R&D determinants such as number and type of new products needed, R&D costs, development paths, and probability of success at different R&D stages. Funders need to understand these assumptions to be able to decide on appropriate funding levels per disease and per product.

A further crucial point is that funding needs are completely unrelated to the severity or prevalence of a disease. Severity and prevalence determine the priority of a disease for funders but not how much money is needed. In practice, the size of the optimum investment is determined only by the type of R&D that is needed and the state of science in the field (which determines the likelihood that R&D will have a successful outcome, as discussed above).

Funding trends

Diseases and products

Neglected diseases fared very differently in terms of their overall funding in 2008, compared to 2007.

HIV/AIDS, TB and malaria again received the lion’s share (72.8%) of global R&D funding for neglected diseases in 2008. However, based on funding from Year One survey participants only ^v, it is clear that all neglected diseases did not fare equally well in 2008. Some recorded significant increases in funding, including malaria (a $42.2m increase), bacterial pneumonia and meningitis ($20.9m), HIV ($14.3m) and the helminth infections ($10.0m). However, several neglected diseases saw reduced funding: dengue (down $8.6m), TB (down $5.7m), diarrhoeal diseases (down $4.8m) and rheumatic fever (down $0.7m). Buruli ulcer, trachoma and rheumatic fever remained severely underfunded – indeed almost entirely forgotten – making the Merck-Wellcome Trust announcement of a new R&D centre for rheumatic fever vaccines very welcome.

There was again a marked tendency to focus on vaccine and drug R&D, with continued neglect of diagnostics, and of platform R&D such as vaccine adjuvants, diagnostic platforms and new delivery devices, which received only 1% of global R&D funding.

Funders

While funder trends cannot sensibly be compared between the two survey years due to the large increase in participants in 2008 (particularly inclusion of many more industry funders and of India, a major public funder), we can nevertheless highlight several points.

If data from new survey entrants is excluded, there was a $100.1m (3.9%) increase in net neglected disease R&D investment in 2008. As noted above, this was the result of modest funding cuts across the board, offset predominantly by a $164.9m increased investment from the Bill & Melinda Gates Foundation. Net funding from public sector governments dropped by $31.4m (1.8%) in absolute year-on-year terms, driven mainly by funding cuts by several aid organisations including Irish Aid (down $15.8m), the Belgian Development Cooperation (down $13.2m) and the Dutch Ministry of Foreign Affairs (down $7.0m). The multilateral sector also reported a small decrease in year-on-year funding ($0.1m); while IDCs also decreased ($5m). Investment patterns by pharmaceutical companies who reported to G-FINDER in both 2007 and 2008 highlighted a marked difference between small and large firms, with SMEs halving their investment from $46.2m to $22.3m, while MNC investments remained largely steady at $186.6m (a small increase of $0.9m, 0.5%).

Overall, as in 2007, the onus of funding neglected disease R&D fell on public and philanthropic donors, who collectively provided 87.6% of total funding ($2.59bn), compared to 90.5% in 2007. Decreased funding from several previously high-ranking government donors, as noted, was offset by the counterbalancing presence of India in the top five government funders of neglected disease R&D. Two organizations, the NIH and the Bill & Melinda Gates Foundation again provided well over half of global R&D funding for neglected diseases (59.3% in 2007, 57.4% in 2008); while 12 groups again provided nearly 90% of total global funding (89.3% in 2007; 87.2% in 2008). The significant role played by the pharmaceutical industry is also evident by their continued presence in the top 12 funders overall (ranked 3rd after the NIH and the Bill & Melinda Gates Foundation),with a contribution of 12.4% of global R&D funding.^V Data from new survey participants is excluded to avoid con?ating increased investment with increased data capture

Conclusion

As with the first G-FINDER survey, we are impressed and heartened by the contributions of so many groups to R&D for neglected diseases, where there is limited hope of reward beyond improvement to the health and life of many millions in the developing world. These contributions are a testament to the human bonds that link us together, even in straitened economic times.

We again urge those wealthy countries who barely figure in this report to review their ability to join this fight for better health and greater health equity for all.

We hope that funders will continue to find the information in G-FINDER useful and that it will help them to target and coordinate their investments so that all neglected diseases and products receive the funding they need.

. . .