A gamechanger for global health funding?
A south Sudanese woman lays in bed on April 2, 2009, at a health clinic in Terekeka, 82 km north of Juba, an area where the population is exposed to malaria, a vector-borne, infectious parasitic disease that is a leading cause of death of infants and children in Africa. TONY KARUMBA/AFP/Getty Images
It's no secret that the world's poorest countries bear the brunt of the global burden of disease.
But some people might wonder: how is it that in our age of rapid DNA sequencing and Google Glass surgeries, we still haven't developed vaccines, drugs and diagnostic tools for helping the poorest of the poor?
Unsurpisingly, one of the biggest obstalces has been money. Pharmaceutical companies prefer investing in drugs that will make them a profit and the final stages of drug trials are massively, increasingly and often prohibitively expensive (this stage in the drug development process is often referred to as the "valley of death" because so few drugs make it out alive). It stands to reason, then, that drug companies are less attracted to developing treatments for diseases like river blindness, a parasitic disease that almostly only impacts people in sub-Saharan Africa.
Today, however, a major announcement was made in New York, where the 68th session of the UN General Assembly is currently underway: a new global health investment fund created by the Bill and Melinda Gates Foundation and JPMorgan Chase.
The fund is being touted as the first of its kind and will push drugs through the expensive final stages of clinical trial. It has already raised $94 million in capital, including $10 million in "anchor funding" from Grand Challenges Canada.
There are several entities involved in this new funding experiment. It comes as no surprise to see the Gates name at the top of the bill – the Gates Foundation is a hugely influential global health player – nor is it surprising to see governments from Canada, Germany and Sweden involved. It is rarer, however, to see Wall Street bigwigs like JPMorgan Chase on a global health announcement.
You can expect to see more partnerships like this in the future, however. This new investment fund is part of a wider global health movement towards more private-public partnerships, especially as traditional streams of aid money continue to dwindle.
"The last several years have seen a decline in government resources going to support these types of efforts," said Peter Scher, JPMorgan's executive vice president and global head of corporate responsibility, in a telephone press conference this morning. "There's a need for the private sector to step up and use its resources."
So why would investors be attracted to the fund? For one, the Gates Foundation and Swedish International Cooperation Agency have promised to provide "downstream" protection – if investors lose money, they will be somewhat insured. The investment is "de-risked," in finance world parlance.
"What this has done is enabled us to bring down
capital for these projects that suddenly makes them financially sustainable,
when historically they wouldn’t be able to compete with projects such as a new
cancer drug or a new diabetes drug," said fund manager Christopher Egerton-Warburton.
The fund is also structured to (hopefully) make money for its investors. According to Egerton-Warburton, the plan is to invest in drugs and medical devices that will benefit not only low-income countries but also rich markets (i.e. think of a malaria vaccine that could also be sold to Western tourists and the military). Royalties and "milestone payments" from those sales will therefore repay investors while also enabling drugs to be sold affordably in the developing world.
Whenever the private sector has a hand in the pot, the fear is always that profits – and not philanthropy – will rule the day. In hopes of keeping the fund's priorities straight, a charitable oversight committee has been set up to ensure that investments prioritize the developing world.
Dr. Peter Singer with Grand Challenges Canada is on the oversight committee and hopes this new fund will help "unlock" global health innovations. He also hopes it will bring drugs to the world's neediest people more quickly.
Due to the high cost of development, drugs introduced in the developed world often take far too long to reach people in poor countries. Take the Hepatitis B vaccine as an example, Singer says.
"That took over 20 years from the time it was in relatively-wide use in the developed world ... to become in widespread use in the developing world, where actually there's many more people with hepatitis," Singer said. "It's that kind of unconscionable time lag and the delinking of the developing and developed markets that this fund would hope to prevent."