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Workshop Summary

The Children's Vaccine Initiative*

A Brief History

The CVI was established to marshal the quantum advances in the science of vaccinology toward new pediatric vaccines with qualities expected to significantly enhance immunization coverage for all the world's children, with some (but not exclusive) emphasis placed on children of the developing nations.3 The issue was not that no new vaccines were being produced. On the contrary, beginning in the mid-1980s, after decades of modest growth mostly driven by each year's births, the vaccine market had entered a phase of dramatic expansion, and commercial vaccine manufacturers and biotechnology firms were busy developing innovative vaccine products.4 The target market was the industrialized world. Products exclusively for a developing-world market were viewed as unlikely to offer adequate returns under then-current market arrangements and were therefore commercially unappealing.

The CVI's mission was to alter the prevailing R&D orientation and to supply new products and models to those developing-country markets. The founders of the CVI—the Rockefeller Foundation, United Nations Children's Fund (UNICEF), United Nations Development Program (UNDP), World Bank, and World Health Organization (WHO)—realized that accomplishment of that mission would be impossible without collaboration between the public sector and industry. Although the public sector in the United States had historically conducted most of the basic research leading to development of new or improved vaccines, product-oriented R&D was undertaken almost exclusively by vaccine manufacturers and development-stage firms, with only a handful of major commercial vaccine manufacturers having the capacity to scale up and manufacture vaccines on the large scale required for global application.5 The public sector had tended to look at vaccines as a separate series of scientific problems, or as product development problems, or as delivery problems, rather than as an "end-to-end," integrated

*  

This section documents the presentations and discussions pertaining to Element 2 of the workshop agenda, "A Learning Case: The Children's Vaccine Initiative."



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--> Workshop Summary The Children's Vaccine Initiative* A Brief History The CVI was established to marshal the quantum advances in the science of vaccinology toward new pediatric vaccines with qualities expected to significantly enhance immunization coverage for all the world's children, with some (but not exclusive) emphasis placed on children of the developing nations.3 The issue was not that no new vaccines were being produced. On the contrary, beginning in the mid-1980s, after decades of modest growth mostly driven by each year's births, the vaccine market had entered a phase of dramatic expansion, and commercial vaccine manufacturers and biotechnology firms were busy developing innovative vaccine products.4 The target market was the industrialized world. Products exclusively for a developing-world market were viewed as unlikely to offer adequate returns under then-current market arrangements and were therefore commercially unappealing. The CVI's mission was to alter the prevailing R&D orientation and to supply new products and models to those developing-country markets. The founders of the CVI—the Rockefeller Foundation, United Nations Children's Fund (UNICEF), United Nations Development Program (UNDP), World Bank, and World Health Organization (WHO)—realized that accomplishment of that mission would be impossible without collaboration between the public sector and industry. Although the public sector in the United States had historically conducted most of the basic research leading to development of new or improved vaccines, product-oriented R&D was undertaken almost exclusively by vaccine manufacturers and development-stage firms, with only a handful of major commercial vaccine manufacturers having the capacity to scale up and manufacture vaccines on the large scale required for global application.5 The public sector had tended to look at vaccines as a separate series of scientific problems, or as product development problems, or as delivery problems, rather than as an "end-to-end," integrated *   This section documents the presentations and discussions pertaining to Element 2 of the workshop agenda, "A Learning Case: The Children's Vaccine Initiative."

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--> process unfolding over a considerable period of time. The CVI would need to adopt a more comprehensive approach to the total cycle and to a range of approaches for reducing its duration in some kind of partnership with industry. The implications of this prospective cross-sectoral strategy would prove to be far greater than anticipated, rooted as they were in distinct sectoral cultures, divergent incentive structures, and mutual perceptions that augured poorly for authentic collaboration. The public sector had historically denigrated the profit motive, correspondingly mistrusted all industrial motivation, and did not fully understand the real costs and effort involved in developing a vaccine. The private sector viewed the public sector as motivated by ideology, not economically realistic, and unpredictable, and feared the vagaries of politics and bureaucracy as essentially threatening to what it saw as its legitimate interests. A core strategy for the CVI was, necessarily, to build trust between these two traditional adversaries. Its leadership needed, therefore, to be concerned with educating both sectors, demonstrating that doing well in terms of profitability and doing good on a humanitarian level were compatible, and somehow modifying the structure of incentives for the vaccine industry—domestic and international—to produce those products defined by the public sector as priorities. The fact that, at the outset, the CVI suffered from a surfeit of bureaucracy and turf struggles would, for a while, constrain its ability to meet its own objectives. Defining and Implementing Cross-Sectoral Collaboration The CVI began with only a vague notion of what would be implied by "public-/private-sector collaboration," especially in a product area with so little apparent economic appeal and with so little hard cash as evidence of public-sector commitment to the Initiative. "Funds available" to the CVI Secretariat leveled off between 1993 and 1995 at about $2 to $3 million a year, including funds earmarked by donors for particular tasks. These levels are seen as insufficient for critical new activities such as communications and work with industry and, even though overall income looks as if it may grow, donor specifications will continue to limit program flexibility. The initial CVI meetings, with government representatives at the table and industry representatives around the sides of the room, accurately reflected the CVI worldview in its early days. Another early cultural artifact was the limited presence of industry overall, confined as it was to a relatively few individuals with whom there had been some kind of historical relationship. And, because they were not suppliers of vaccine to UNICEF or to the Pan American Health Organization (PAHO), U.S. vaccine producers were not adequately included in these first encounters. These phenomena no longer prevail. The range of industries involved with the CVI has expanded and industry's representatives are brought into dialogues sooner in a more consultative fashion, although some feel still not soon enough; and the cross-functional, cross-organizational team approach has slowly proved more

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--> effective. The reasons for these shifts should be instructive, proceeding as they did from heightened sensitivity on the public-sector side, greater mutual understanding of sectoral motives and functioning, the CVI's growing ability to define critical areas of coincident interest, and practical implementation mechanisms. Defining, Creating, and Stabilizing the Market Situation Analysis There is consensus that a most useful and in many ways groundbreaking CVI undertaking was the contracting out, to professional private-sector management consultants, of the task of analyzing the economics of the vaccine industry, thereby providing a fresh evidence base for policy determinations.6 The first situation analysis by Mercer Management Consulting calculated the size of the world vaccine market in 1993, then estimated at around $2 billion annually, and revalued it at almost $3 billion and growing rapidly; the basic pediatric vaccines accounted for one-third of that market. The report also discussed the dynamics of the world vaccine market and examined the role of large-scale purchasing by donors.7 Overall, the study provided both sectors with a common understanding of economic realities, helped the public sector feel informed and therefore able to work with industry as an equal partner, effected change in public-sector strategies, and modified industry perceptions of market potential. To date, three Mercer analyses (1994, 1995, and 1997) have been conducted, the latest of which addresses the key factors of pricing and supply as related to product life cycles. Market Segmentation Another CVI innovation that has enhanced private-sector views of the world vaccine market was segmentation of that market by country groupings according to ability to pay. The result has been that UNICEF no longer donates vaccine to any nation requesting it but now targets donations and shapes its strategy to fit ''bands" of countries, each band speaking with a distinct "market voice" (see Figure 1). The first two bands (A and B), comprising the poorest and smallest countries or "the CVI market," receives frank donations or highly preferential prices. The intervening mechanism is that UNICEF purchases, or subsidizes purchases, of vaccines on behalf of those countries. The third and fourth bands (C and D) contain the larger countries with higher per capita incomes, that are being strongly encouraged toward self-sufficiency either through direct procurement or local production, and who can also afford a higher price point, although they are not always pleased to do so. The fifth band (E) consists of the industrialized Western countries, the primary market for international suppliers and for newer vaccines.

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--> FIGURE 1. A global targeting strategy for sustainable vaccine supply, as defined by Bands A-D, and market segmentation and tiered vaccine prices according to the primary market of international suppliers, direct procurement, local production and the UNICEF market. SOURCE: A. Batson, WHO Global Program for Vaccines and Immunization. Reprinted with permission. The decision to segment derived partly from concerns about funding sustainability and the need to target limited funds to the neediest countries.8 The premise was that industry would only provide a lowest-tier price if that price were limited to countries where market forces had failed. A reconstituted customer list would also serve as an incentive to many more countries to begin buying vaccines, in turn providing greater incentives to manufacturers, particularly U.S. manufacturers, to reassess the developing economy market. The policy has evoked controversy and its ultimate success will be highly dependent on two lead factors: (1) the value assigned by putative purchasers to vaccines, especially to newer and more costly formulations, and on the prices those purchasers are able to negotiate with industry; and (2) agency commitment to helping countries find ways to purchase their own vaccines. Nevertheless, the segmentation approach provided a platform for such negotiation, between UNICEF and industry for the neediest countries, and between industry and countries in the higher-income bands. Centralized Procurement The Mercer study concluded that, in the case of vaccines, high-volume public-sector procurement does "move the market," that is, it influences manufacturers'

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--> behavior and thus can help or hinder achievement of public-sector programmatic goals. The fact that UNICEF purchases 40 percent of the supply of traditional vaccines produced by 10–12 core suppliers, and roughly 20 percent of the total global supply of these vaccines, has been crucial to expanding demand for vaccine doses over the past eight years.9 For manufacturers with large excess production capacity, the increases in plant utilization generated by guaranteed high-volume purchases by UNICEF and PAHO have permitted them to use that capacity, thereby driving down per-dose production costs; this is believed to have been the most important economy of scale in terms of making sales to UNICEF attractive even at relatively low prices.10 In addition, the learning curve associated with greater cumulative volume is understood to be very steep and recognition of manufacturing process economies comes with corresponding speed; thus, production experience with large volumes serves to drive costs down still further and more quickly. UNICEF also modified its customary commodity-driven approach to evaluating potential source manufacturers and incorporated three more requirements into its tender procedures: information about the overall product portfolio a bidding company could offer to meet the needs of the developing country market, those products a company might offer that responded to UNICEF/WHO priorities in the tender period, and the company's R&D pipeline. In addition, because the CVI, WHO, and UNICEF are interested in access to newer vaccines—Hib conjugates, hepatitis B, and, eventually, pneumococcal conjugate vaccines—they have worked together to find ways to make procurement processes more flexible and to explore with industry ways to create value other than price—for example, "bundling" vaccine orders, using supply contracts, and extending contracts beyond the typical duration of two years.11 These approaches and other efforts at true partnership have motivated some vaccine companies to donate vaccines, provide cash grants to special immunization programs and disease surveillance, lower prices, make selected new products available in some preferential fashion, and furnish R&D pipeline information for assessment by WHO/UNICEF advisory groups. Tiered Pricing The backbone of public-sector access to new vaccines is a strong "tiered" pricing system in which the relative ability to finance vaccines is translated into different price levels for different countries. Some countries, including industrial country governments, pay a price for a given product that covers the full costs of production as well as the costs of overhead and R&D, and provides a reasonable return. Other countries, namely the poorest countries in bands A and B, are charged a price that covers the marginal cost of producing marginal volume for these markets, plus a small contribution to overheads. This price does not cover R&D, investment in new facilities, marketing expenses, or a number of other costs not associated with supplying this market. The middle, wealthier countries (bands

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--> C and D) pay different prices covering production and varying levels of contribution to overheads and R&D. This strategy, which has been crucial in building up national immunization programs and expanding coverage worldwide, is entirely based on marginal volume with marginal costs and resulting marginal prices, and does not increase the price to the U.S. consumer. In fact, the concept was advanced that producing solely for the United States market may make U.S. manufacturers higher-cost producers. However, confusion about the economics underlying cost allocation has resulted in criticism in the United States and, occasionally, other countries.12 U.S. vaccine manufacturers have not bid on a UNICEF or PAHO tender since 1982, when the industry was criticized by members of the United States Congress for selling vaccines for use in developing countries at prices lower than those offered to U.S. public- or private-sector purchasers; a comparable criticism was levied in 1993.13 Also during the period 1993 to 1995 in Congress, another battle was waged over differential pricing, this time related to large-scale vaccine purchases by the U.S. government at prices substantially lower than those listed in the private sector.14 Although tiered pricing can play such a powerful role in industry decisions to invest in vaccine research, development, and production, discussions of the subject have often generated more heat than light. The mechanism could conceivably play a role in connection with emerging infections—HIV/AIDS may prove to be the most immediate example—but the public sector has yet to frame a refined and thoughtful argument to take to the Congress for more reasoned, less stereotypic discussion than has been the case. The task cannot be done by industry alone, because its motives will inevitably be perceived as suspect, particularly when the topic is a "public good" with undertones of entitlement. Drug pricing tends to be a contentious issue in and of itself, so that the components of the arguments that will need to be made are subtle and complex, requiring good evidentiary material, meticulous analysis, and careful explication, perhaps, in connection with infectious diseases, by such entities as the concerned professional societies.15 Intellectual Property and Its Protection Intellectual property protection has been used as a policy tool for many years within the United States to promote "the right amount of research and development in the country." The mechanism rewards inventive activity with the government's promise of a certain period of exclusivity in the marketplace in exchange for full public disclosure of the invention in question, at the end of which period the invention falls into the public domain. In the pharmaceutical industry, owing to the lengthy time required to bring a product to the market, the period during which R&D investment can be recouped may become quite brief. To remain successful, a company must have products in its pipeline in all different phases of the "product life cycle." Mature products, approaching expiration of their patents and soon to face increased competition, are

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--> then replaced in the marketplace with new products, whose exclusivity will refresh the company's stream of earnings. Substantial interruptions in this process may threaten a company's very existence and, in fact, explain much of the contemporary explosion in industry mergers. R&D investment risks become too high to reasonably assume without adequate patent protection which becomes, as a result, a major driver of industry economics and innovation. Patent policy has also become central in U.S. foreign trade policy. The Trade-Related Intellectual Property Rights (TRIPS) Agreement, hammered out in the General Agreement on Tariffs and Trade (GATT) negotiation process and put into effect in the United States and Europe on January 1, 1996, set minimum standards for intellectual property protection around the world. It includes protection for pharmaceutical products, a 20-year patent period as a minimum standard, and an adequate judicial enforcement system. Developing countries were given until the year 2000 to adhere to the TRIPS standards; an "IPR-resistant" group, which includes India and Argentina, was given until 2005 to adopt product protection for pharmaceuticals. A CVI-sponsored meeting in Brazil in 1995 explored the position previously held by many in the public sector that patent protection was an obstacle to vaccine production in developing countries. At a CVI-sponsored follow-up meeting in Bellagio, Italy, in February 1997, it became clear that protection of and respect for intellectual property are now seen as rational and defensible stimuli for further innovation, a position that has been adopted as a focal activity for the CVI and for the International AIDS Vaccine Initiative (see following discussion). Technology Transfer The CVI began at a time when the prevailing wisdom in the international health community was that local production would be an inherently less costly, more reliable, and more affordable way to ensure vaccine supply in the developing world. With limited exceptions, that premise seems to have failed the tests of time and careful economic analysis. Even though over 53 countries worldwide now produce one or more of the basic childhood vaccines, the quality, reliability, and real costs of those vaccines have proven problematic in a number of respects and CVI strategy has been revised accordingly. CVI and WHO have shifted to proposing that each facility do a fundamental review of its long-term viability and address the financial, managerial, regulatory, and policy implications of the upgrading needed to be a reliable, quality, affordable supplier of current and future vaccines. In that connection, participants in the February 1997 CVI/Rockefeller Foundation conference in Bellagio on "The Global Supply of New Vaccines" announced agreement that, to justify public confidence in the safety and effectiveness of vaccines produced in developing countries for national immunization programs, assurance of their quality would have to be independently overseen by well-functioning national control authorities. Such assurance will be

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--> crucial to entering into the sorts of public- and private-sector partnerships that can permit access to new technologies, including new vaccines. Individual Product Experiences A More Heat-Stable Polio Vaccine Many connected with the early Polio Eradication Initiative, including the WHO/EPI Technical Advisory Group, called for research on a more heat-stable polio vaccine, believing that it would be essential to the growing commitment to eradicate the disease worldwide. Despite lack of an industrialized market for such a product, some progressive members of the business community decided to take a risk within their own companies and attempt to prove that doing well and doing good could be stretched to include something as marginal to their customary market as a more heat-stable polio vaccine. As a consequence, industrial effort and investment were deployed and the project became something of a test case in intersectoral cooperation. Over time, however, public-sector agreement on the need for an improved vaccine, already not unanimous, became still less so with changes in CVI leadership, resistance from operational levels, and new technical and epidemiological insights, some better-founded than others. Eventually, a decision was made to abort the project. Unfortunately, the private-sector partners were not involved in the relevant processes of consultation and decision. This was perceived as a major breach of trust, yet its ramifications for future intersectoral relationships were not appreciated by the public-sector decision makers, new to working with industry and not sensitive to its understandings of investment and risk. This history was contrasted with that of the 1976 swine influenza vaccination program, when what has been called a disaster ensued as a consequence of an agenda that did not adapt to shifts in circumstance. 16 Despite disparities between many aspects of the two events, they send a similar message: the need for a scientific and technical consensus; an explicit decision in advance as to the market for a successful R&D effort; periodic review and reevaluation that is both broad and meaningful; and, throughout, close consultation between public- and private-sector collaborators. The swine flu affair taught an additional lesson of prospective relevance to emerging infections disease: Programs to prevent such diseases are essentially insurance policies, entailing some risks almost by definition, rather than subjects for punishment when anticipated dangers fail to materialize. The Hepatitis B Vaccine The case of the hepatitis B vaccine is somewhat different, yet lack of unanimity in some public-sector quarters remains an issue. The hepatitis B vaccine was developed in the United States for a market in the Western industrialized

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--> nations that was viewed as small but potentially lucrative. The independent International Task Force on Hepatitis B made the argument to industry that this narrow market could be expanded profitably to a much larger market in the developing world if the vaccine were sold at a substantially lower price for use in immunization programs in those nations; the lower price would be offset by high-volume sales, in other words, through a tiered pricing system and subsidized bulk procurement. Driven partly by the Task Force's argument and partly by the entry into the market of competitive products, the initial price of $30 was subsequently progressively lowered to less than $1 per pediatric dose, and, in 1992, WHO recommended that the vaccine be introduced into national immunization programs, most urgently in hyperendemic areas. That recommendation encountered resistance in some international agencies and developing countries, resistance rooted primarily in questions about cost, whether hepatitis B is properly considered a "childhood disease," the relative merits of the two principal vaccine formulations, and concerns about delivery capacity and sustainability. The resulting mixed messages to industry, always concerned about predictability, suggest the desirability of different public-sector approaches to product introduction in connection with the new acellular pertussis vaccine, haemophilus influenzae type b (Hib) conjugates, and the measles-mumps-rubella combination (MMR).17 Other Models* The Malaria Vaccine Development Board Malaria is not a formal focus of the CVI but is nonetheless highly relevant to a discussion of the CVI because of the disease burden it generates for children and because of the practical and theoretical challenges it shares with the Initiative. And, of course, malaria is most relevant to Forum concerns about the special challenges of addressing those emerging and reemerging infections that predominantly threaten the developing countries. Until very recently, malaria has been the quintessential example of a pharmaceutical "orphan," partly because of the challenges the disease and its vector posed to science, partly because there has not been a prevailing view that the disease threatened the industrialized world. The recommendation that a Malaria Vaccine Development Board be established resulted from a workshop under the aegis of a small multisectoral committee at the IOM in 1996, charged with evaluating current international malaria R&D efforts and making recommendations for implementation by the U.S. government.18 The committee concluded that even though research now indicates that it will be, in fact, technically possible to protect against malaria with *   This section documents the presentations and discussions pertaining to Element 3 of the workshop agenda, "Other Models and Mechanisms."

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--> a vaccine, development of such a vaccine will be neither simple nor straightforward. The complex life cycle of the parasite will require combining multiple antigens, a novel delivery system, and the use of adjuvants to stimulate immune system response. There also may have to be two end-products: a vaccine that will provide short-term protection, primarily for the military and travelers' markets, and a vaccine that will modulate infection and reduce mortality in children in endemic areas, that is, the developing world.19 A related complication has to do with intellectual property rights. At one time, patents on malaria antigens served to stimulate research and development but, with time, they have become something of a problem. Pieces of what may be significant intellectual property are scattered around the globe. Some patents are held by Australian organizations and companies; some by Swiss, French, or U.S. companies; some by universities. There are also potentially important adjuvants that remain unlicensed and whose protection may be an issue. Aggregating all the intellectual property rights for a multicomponent, multi-antigen vaccine is a formidable dilemma that cries out for remediation. There is also the market question. Despite the huge burden of disease produced by malaria—as many as 500 million cases a year and around 2 million deaths—the potential market for malaria vaccines has not been understood in a way that might stimulate continued investment. The fact that malaria is associated with large populations of the very poor, in regions where the delivery of health products is typically difficult, led industry to conclude that the market for a malaria vaccine would be primarily donor-dependent, with little representation from more affluent segments of developing country populations, with the limited exception of the military and travel markets. The combination of some or all of these factors, together with failure in earlier commercial development efforts, deeper understanding of the technical challenges involved, and an erratic pattern of support for public-sector malarial research, was what had led to attrition in the relatively few industrial and public-sector R&D efforts that had managed to get under way.20 The IOM committee's primary conclusions were that the dimensions of the problem demanded a commensurate commitment, and that the United States would have to take a leadership role in the search for a malaria vaccine. A secondary conclusion was that the tasks at hand—making the international case for support, attracting many more resources from all sectors worldwide, assembling the critical scatterings of intellectual property, performing a competent reassessment of developing world market realities—are necessarily multisectoral activities. The Malaria Vaccine Development Board is envisioned as a central organization that would focus communication among industry, the academic and military research communities, and public-sector donor and technical agencies, to get these tasks performed and stimulate the synergy lacking among what had become a very few parts.21

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--> The International AIDS Vaccine Initiative (IAVI) Like malaria, HIV/AIDS is not a formal focus of the CVI but is similarly relevant to a discussion of the Initiative. Both affect large populations, of which the majority are outside U.S. frontiers and very poor; both present daunting scientific challenges; and both must deal with failure of the market to stimulate the necessary levels of R&D investment. The IAVI and the notion of the Malaria Vaccine Development Board were included in the workshop discussion as possibly informative variations on the CVI approach to solving a "social product" problem. The exploration that led to the establishment of the IAVI in 1996 began in 1993, when HIV vaccine research, stymied by technical difficulties, was at a nadir in comparison with the level of investment in HIV/AIDS therapies. Although the prospect of DNA vaccines has awakened greater interest in vaccinology in general, only a few companies have active programs in the area of HIV and only one HIV-DNA vaccine has progressed to human trials.22 Furthermore, these programs focus almost exclusively on subtypes found in North America and Europe. The purpose of the IAVI is to help accelerate development of preventive HIV vaccines appropriate for use where the epidemic is spreading most rapidly, that is, the developing world; to compensate for the fact that no agency has a mandate corresponding to that purpose; and to remedy the lack of international coordination, backed with adequate resources, to accomplish what is really a global objective. The Initiative has three overarching strategies: (1) advocacy for vaccine development; (2) a "push" strategy to support targeted research and development on parallel tracks; and (3) a "pull" strategy to create a more enabling environment for vaccine development. Its scientific emphasis is on gaps in existing efforts and on accelerating applied R&D. Its first-phase scientific objectives are to focus on development of HIV-DNA vaccines and expanded safety studies of live-attenuated HIV vaccines. The IAVI's initial backing was provided by several foundations, UNAIDS, and the World Bank. That funding base is now being broadened to include new sources. A key element in IAVI's financial strategy is to try to persuade the Bank, which has already committed over $700 million in its response to the global AIDS epidemic, to establish a $100 million line of credit for each of the 10 most disease-burdened countries. The rationale is that this would, in effect, create a $1 billion market into which research costs could be amortized as an incentive to industrial investment. The general concept is to load the front end of the R&D process using public-sector funds to drive a directed research effort. The IAVI has also begun to invest energy in intellectual property rights issues. As vaccine development has become more complex, every stage of the R&D process is now likely to be patented. The acquisition of multiple patents was critical to the development of the hepatitis B vaccine and, as indicated above, is expected to be critical in the development of a malaria vaccine. The IAVI will attempt to determine how it can use intellectual property rights as incentives for industry to work with the Initiative in developing and distributing an HIV vaccine. Liability will be another strategic area for the IAVI; the example was cited of

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--> TABLE 3 Public-Sector Priorities for Addressing Emerging Infections   State Health Depts. CDC DARPA FDA NIAID DOS VA World Bank Surveillance and response X X X     X X   Basic research X   X X X   X X Applied research X X X X X X X   Prevention and control X X     X X X   Public health infrastructure X X     X X X   Public education X X   X   X     Promote global preparedness   X X     X     Product availability   X   X   X     Engagement of private sector   X X X X X   X

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--> Although many lessons from the CVI have been converted into effective action, issues inevitably remain. Much of the Initiative's energy has been dedicated recently to catalyzing developing world access to vaccines already in limited use, a focus justified by the need to solve immediate problems of vaccine introduction so as not to generate a backlog of under-used vaccines. The point was made that the original notion of creating and licensing a brand new, single-dose, oral, multivalent vaccine was somewhat deflected by the gradual recognition that vaccines for many of the major causes of morbidity and mortality in developing countries were already being developed for industrialized markets. Although a return to that early focus will require a different set of processes, it is one for which industry has all the necessary tools. The concept was advanced that what may be needed is the development of a broad portfolio of potential components at different stages of development, where a number of risks have already been resolved by the public- and nonprofit-sector R&D through early-stage trials. The latter is the future challenge the CVI faces and for which its half decade of experience has been, in effect, a practice session. Issues for Resolution Other issues arose in the workshop that go beyond vaccines and were identified as being of special, even profound relevance to emerging infectious diseases, especially when those diseases are likely to be commercial orphans. In their majority, these are areas of tension concerning mechanisms that could stimulate the research that is most directly necessary for addressing emerging infections, but that are somehow problematic. Agendas and Priorities Although each public-sector institution is sui generis and driven by different basic mandates, there seemed to be general agreement among the public-sector participants in the workshop about the broad areas of programmatic importance for dealing with emerging infections. What did not emerge as anticipated was a list in response to industry's expressed interest in clear portrayals of specific disease priorities, although HIV/AIDS, tuberculosis, and malaria would now seem to be obvious enough. Given the difficulty inherent in predicting the arrival and future significance of emerging infections, any such list is necessarily limited to "arrived" diseases about which there is already justification for concern. The rest, as the public-sector agendas summarized in Appendix A suggest, is being categorically prepared.

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--> Two alternative responses to industry's need to know were advanced. Well-articulated agendas for development of generic requirements, for example, diagnostics that could not only identify pathogens but assess development of resistance, or multiagent therapeutics; Surveillance systems integrated and configured so as to be, continuously and formally, accessible to all interested parties. The value added to the second alternative would be the base it would provide for more rapid and efficient updating of labeling for antimicrobials, another highly important problem that remains unresolved. Funding Inadequate funding appears to be an issue at every level of infectious disease surveillance, as evidenced in insufficient infrastructure, inability to support recurrent costs, or both. These problems are not exclusive to the developing world; the surveillance capability of the United States is similarly threatened. The subject of emerging infectious diseases has commanded interest in the U.S. Congress that has resulted in additional allocations for addressing the issue. However, today's pressures for public-sector austerity augur poorly for future increases, particularly with regard to global requirements. Two major areas of U.S. contribution to global health are problematic: (1) official development assistance (ODA) and (2) investment in research and development for those diseases that dominate the needs of developing countries. Beyond the matter of inadequate absolute amounts, funding instability is a critical problem, especially for research and development, characteristically a long-term endeavor.40 Erratic funding also hampers maintenance of infectious disease epidemiology surveillance of the quality needed to properly inform both the public health and industrial agendas. Multi-Tiered Pricing Price tiering, in conjunction with new approaches to market segmentation and high-volume commodity procurement, could serve the needs dictated by certain infectious diseases. At the same time, despite its potential leveraging role, differential pricing carries considerable political freight. The public sector has yet to refine arguments that might be made usefully to policy makers, not just in the United States but in other countries that question the appropriateness of the mechanism. Restricted Distribution Any imposition of restrictions on the distribution of products that acts to constrain their market share for a significant period of time is an obvious economic

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--> disincentive to industrial investment in developing new products. This disincentive is unlikely to be overcome by imposition of higher prices to compensate for lost volume. Whether the longer useful life that can be achieved by limiting utilization of an antimicrobial product would act as adequate compensation does not seem to have been analyzed. The tension between responsible marketing and reasonable profits is high; the importance of getting a handle on this topic was agreed to be similarly high. Surrogate Endpoints The identification and use of surrogate endpoints has been critical for developing new products to address the AIDS pandemic and is part of the FDA strategy for accelerated approval of certain product classes. The development of generic categories of endpoints that might be used in connection with a range of infectious disease endpoints is an issue awaiting consideration, as is the development of alternatives to correlates of protection for vaccines against diseases for which clinical trials would be difficult or even impossible, for example, the case of Ebola virus or pathogens used in biowarfare or bioterrorism. Patent Extensions Lack of patent protection has been identified as a disincentive to developing new antimicrobials using unexplored compounds that have been abandoned by pharmaceutical companies. Because these are now off-patent and are therefore insufficiently protected from competitive market forces, there is little reason to pursue them further. Existing protections are viewed as insufficient, given R&D costs. Extension of patent protection in these circumstances could conceivably be motivating for patent holders. On the other hand, would-be generic competitors might be expected to oppose such extensions. Thus, as a minimum, a delicate balancing of interests would be required. However, both the general notion of patent extension for abandoned compounds and its specific implications remain unexamined as possible incentives for development of infectious disease products. Technology Transfer and Local Production As a way for developing country markets to acquire better access to good quality health products, technology transfer for local production of those products has often disappointed, largely because of the unreliability of local infrastructures on which advanced technologies are highly dependent. On the other hand and somewhat ironically, the success of technology transfer may prove to be a problem, since it may cut into market share for imported products. In the case of

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--> infectious disease products where a key technology is not readily transferable, this is not an issue; however, for older, lower-cost technologies, local production does become a factor in diminishing market appeal. The question of how big an issue this may be for emerging infectious diseases has not been asked and may be, with the possible exception of drugs for tuberculosis, largely premature. Orphan Drug Designation Work remains on the subject of the potential of orphan drug designation for at least some emerging infectious diseases. As the legislation is written, there would seem to be elasticity in terms of diseases affecting very small U.S. populations, at the same time that non-U.S. populations, specifically developing world populations suffering from those diseases, might be quite large. Furthermore, even though congressional receptivity to utilization of orphan drug legislation for generic public health needs has been limited, prospects for orphan drug designation seem to be more likely when the objective is to spur products already in company pipelines to market. The challenge is then to define what products are needed for what emerging infectious diseases and to seek to make a match with what industry may have in relevant pipelines. This is obviously a topic for continuing intersectoral conversations. Other Topics Other topics for such conversations might well build on reported congressional interest in an enhanced basic research agenda on immune response mechanisms; more comprehensive surveillance of infectious diseases, especially foodborne pathogens; a major public education campaign to promote more judicious use of antibiotics by both patients and physicians; and options for energizing product development for niche markets. Each of these, like the potential for orphan drug designation, might well reward more precise focus and articulation than has been the case so far. A Final Observation The scientific quandaries posed by complex diseases like malaria, STDs, and HIV, as well as the entire matter of antimicrobial resistance, are daunting. In addition, while the market system has served well, it engenders a sometimes fierce adversarial environment, in which the interests of each party—not to mention the overall public good—are often submerged in the service of emotion-laden stereotypes and external forces. Each of the parties—labeled generally as industry, government, and the consuming public—still has a way to go in articulating its vision of the optimum outcome as the elements of a rational policy confrontation.

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--> Still, the strategies and learning from the CVI, from HIV/AIDS, and from the many mechanisms described in this report, offer plentiful options for stimulating research and development on products for emerging infectious diseases, at least some of which will be, for one reason or another, orphans that will need to be adopted creatively. Notes 1.   Institute of Medicine. Contraceptive Research and Development: Looking to the Future. PF Harrison, A Rosenfield, eds. Washington, D.C.: National Academy Press, 1996. 2.   R Twombly. The future face of disease. Environmental Health Perspectives 105(2):184–186, February 1997. 3.   The CVI now defines itself as "a coalition committed to expanding protection against infectious diseases, particularly through the development and introduction of new and improved vaccines" (CVI Secretariat, Conclusions from the CVI/Rockefeller Foundation Bellagio Conference on the Global Supply of New Vaccines, 2–7 February 1997, Geneva, World Health Organization, 1997). 4.   A number of explanations have been offered for the vaccine renaissance, all of which probably apply. These include industry's gradual appreciation of the potential of the National Vaccine Injury Compensation Act passed in 1986; great advances in molecular and cellular biology and biotechnology, and the promise of genetically engineered vaccines; dedicated efforts to develop vaccines for such key needs as AIDS prevention; understandings about the infectious etiologies for some chronic diseases; greater awareness of the cost-effectiveness of vaccines as a public health measure; WHO's Expanded Program on Immunization (EPI) and a better than doubling of the number of vaccine doses purchased by UNICEF beginning in 1985; and growing concern about antimicrobial resistance (Institute of Medicine, 1996). 5.   At the Summit, it was proposed that the ideal CVI vaccine should be given as a single dose (preferably orally); contain multiple antigens; and be affordable, heat-stable, effective when administered near birth, and effective against diseases not currently targeted (Institute of Medicine. The Children's Vaccine Initiative: Achieving the Vision. VS Mitchell, NM Philipose, JP Sanford, eds. Washington, D.C.: National Academy Press, 1993). 6.   World Health Organization. Summary and Conclusions, and Presentation on Sustainable Vaccine Supply/Global Targeting Strategy and Market Segmentation: Tiering Vaccine Prices. Children's Vaccine Initiative/Rockefeller Foundation Bellagio Conference on the Global Supply of New Vaccines, 3–7 February 1997. 7.   Mercer Management Consulting. Report on the U.S. Vaccine Industry. Commissioned by the Department of Health and Human Services, 1995. New York: Mercer Management Consulting. Summary of UNICEF Study: A Commercial Perspective on Vaccine Supply. New York: Mercer Management Consulting, 1994. 8.   As of this writing, UNICEF has not found the funds it needs to purchase Hib vaccine. 9.   In fact, most of UNICEF's purchasing from this group of suppliers is from a subset of the group. The balance of the traditional vaccines needed in the developing countries is satisfied through procurement and local production.

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--> 10.   While the following points were not raised at the Workshop, it seems important to raise them here as items for future analysis. The Mercer report did not address at least two issues that are especially relevant to emerging infectious diseases. The first question is whether benefits from economies of scale will apply to new vaccines; for example, increasing lot size for vaccines involving conjugation technology may be more complex and costly than for the current vaccines. The report also did not determine whether prices offered by donor agencies would be sufficient to induce manufacturers to alter existing programs for vaccines under development, where alternative formulations might be more appropriate for some circumstances (Hausdorff 1996; WP Hausdorff. Prospects for the use of new vaccines in developing countries: Cost is not the only impediment. Vaccine 14(13):1179–1186, 1996). 11.   Contract extensions, in a manner not dissimilar to patent extensions, can have the effect of reducing market competition, a dynamic perhaps worth noting in future strategy discussions. 12.   The question of what constitutes a "reasonable rate of return" is of course elusive, highly dependent on individual and sectoral perspectives, and obviously a matter for lengthy debate, debate in which the Forum did not engage. 13.   United States Senate. Hearing to Review Federal and State Expenditures for the Purchase of Children's Vaccines. Subcommittee on Investigations and General Oversight, Committee on Labor and Human Resources, July 22. Washington, D.C.: U.S. Government Printing Office, 1982.—WJ Clinton. Statement at the Fenwick Center Health Clinic, Arlington, Virginia, February 12, 1993. 14.   There are two major classes of buyers of childhood vaccines in the United States: the public sector, including federal and state governments, and the network of private-sector physicians, hospitals, pharmacies, and clinics across the country. The federal government, through the Centers for Disease Control and Prevention (CDC), negotiates a bulk purchase price for priority vaccines with key at rates substantially lower than those listed in the private sector. The CDC then makes grants to the states to purchase the vaccines, passing on the lower prices. Over the past decade, the public sector has purchased an increasing share of childhood vaccines, a trend to which industry objects vigorously as a major disincentive to innovation. Calls for universal federal vaccine purchasing have been of special concern (Institute of Medicine 1993). 15.   The transcript will show that Forum members representing industry recused themselves from any discussion of price. 16.   MR Hilleman. Cooperation between government and industry in combating a perceived emerging pandemic: The 1976 swine influenza vaccination program. Journal of the American Medical Association 275(3):241–243, January 17, 1996. 17.   This information did not emerge in the workshop but was subsequently provided as supportive material by one of the participants. Sources: M Kane, J Clements, D Hu. Hepatitis B. In Disease Control Priorities in Developing Countries . DT Jamison et al., eds. New York: Oxford University Press, 1993, for the World Bank. 18.   Institute of Medicine. Vaccines Against Malaria: Hope in a Gathering Storm. PK Russell, CP Howson, eds. Washington, D.C.: National Academy Press. 1996. In some respects, this study was a by-product of an earlier IOM study on this topic (Institute of Medicine. Malaria: Obstacles and Opportunities. SC Oaks Jr. VS Mitchell, GW Pearson, CJ Carpenter, eds. Washington, D.C.: National Academy Press, 1991).

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--> 19.   The 10 April 1997 issue of Nature cites the comment by a researcher at the Institute Pasteur that it is ironic that companies should abandon malaria drug discovery just when assays for screening for active drug compounds are much more sensitive than in the past, and when genome research and molecular studies are yielding new targets for rational drug design. However, the industry view cited in the same article seems to be that even though basic research is at last producing truly interesting leads, it has not progressed sufficiently to be anything but a costly and risky business. 20.   The large vaccine manufacturers, SmithKline Beecham and Pasteur Mérieux Connaught, still work on malaria vaccines and several biotechnology firms remain engaged in cutting-edge work (Chiron, Virogenetics, Vica), although others (e.g., Merck, Sanofi, Behringwerke, and Rhône-Poulenc Santé) have withdrawn from the area. Global spending on malaria research by the public and nonprofit sector has been declining over the past decade, although new infusions from the Wellcome Trust, WHO, and NIAID, and hoped for infusions from the World Bank are brightening the picture somewhat (D Butler. Time to put malaria control on the global agenda. Nature 386:535-541, 10 April 1997). 21.   As this was being written, major coverage in the 10 April 1997 issue of Nature reported that discussions begun last year between the World Bank and WHO have expanded and there may in fact be a multiagency, 30-year program to control malaria, currently entitled ''The African Malaria Initiative." At a meeting in January 1997 in Senegal, the Pasteur Institute; Medical Research Councils of the United Kingdom, Netherlands, and European Commission; NIAID, CDC, U.S. Army; and others, met to try to define a research agenda for malaria in Africa. The question of whether the program would fund research directly is still open; NIH Director Harold Varmus is talking about formal partnerships among the world's major research bodies in that connection. 22.   DNA vaccines, also known as "naked DNA vaccines" or "genetic immunization," are being studied for many diseases including hepatitis, influenza, malaria, and tuberculosis. For several reasons, DNA vaccines are said to be one of the few HIV vaccine approaches that have potential to be distributed worldwide at reasonable cost (International AIDS Vaccine Initiative Newsletter 2(1), Winter 1997) 23.   Of the 38 vaccines and 25 antivirals, 10 and 14, respectively, were for sexually transmitted diseases, including herpes simplex, hepatitis B, human papillomavirus, pelvic inflammatory disease, and cytomegalovirus. (Pharmaceutical Research and Manufacturers of America, New Medicines in Development for Infectious Diseases: 1996 Survey, Washington, D.C., 1993.) 24.   The same ranking held for the biotechnology subsector, reflecting what is happening farther back in the R&D pipeline (KB Lee Jr, GS Burrill. Biotech 96: Pursuing Sustainability. Vienna, VA: Ernst and Young LLP, 1996). 25.   Agouron, AB Astra, Aji Pharma USA, Bayer, Boehringer-Ingelheim, Bristol-Myers Squibb, Ciba-Geigy, DuPont Merck, Gilead Sciences, Glaxo Wellcome, Hoechst AG, Hoffman-La Roche, Merck, Pfizer, Pharmacia & Upjohn, Sigma-Tau, SmithKline Beecham, and Triangle Pharmaceuticals. 26.   In 1996, 53 new drugs were approved in an average time for each of 17.8 months. Thirty-six of those were designated for "standard" review and were reviewed in an average of 19.7 months, and 17 were rated for "priority" review by the FDA and had an average review time of 13.7 months. Finally, of the 17 priorities, 15 were approved under user fees and had an average review time of 10.5 months. (JF Beary, III. The FDA User Fee

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-->        Program. Washington, D.C.: Pharmaceutical Research and Manufacturers Association, 1997.) 27.   Food and Drug Administration. Drugs Intended to Treat Life-Threatening and Severely Debilitating Illnesses. 21 CFR Ch. 1 (4-1-96 Edition): Part 312, Subpart E, §312; Part 314, Subpart H, §314. 28.   Since the date of the Forum's February workshop, the FDA has proposed a "New Use Initiative" with the purpose of accelerating development of new and supplemental uses of medications in general. The Initiative would permit, as evidence for primary and supplementary approvals, utilization of all available data to determine the effectiveness of drugs and biological products. The Initiative provides anecdotal information about instances in which the FDA has already done this successfully and gives industry clear guidance on when the agency can decide that a drug is effective for a new use without the standard requirement for data from two new clinical trials. For example, in some cases a drug's effectiveness can be extrapolated from existing efficacy data, either from a new single trial supported by existing, related clinical data, or documented by adequate evidence from a single multicenter study (Department of Health and Human Services. FDA proposes New Use Initiative. HHS News, 13 March 1997). 29.   The Morbidity and Mortality Weekly Report is already available on-line and the Physician's Desk Reference is supposed to be on-line by the end of 1997. 30.   The $44 million is apportioned as follows: approximately 39 percent for surveillance and response, 17 percent for research, 19 percent for prevention and control, and 25 percent for infrastructure. 31.   The term "sponsor" is used by the FDA to mean the entity that assumes responsibility for a clinical or nonclinical investigation of a drug, as well as for compliance with all pertinent regulations. A sponsor may be an individual, partnership, corporation, government agency, manufacturer, scientific institution, or an investigator regularly and lawfully engaged in the investigation of drugs. 32.   Food and Drug Administration. Miscellaneous. 21 CFR Ch. 1 (4-1-96 Edition): Part 312, Subpart F, §312.120. 33.   As this is being written, bills are before both houses of Congress to revamp the U.S. Patent and Trademark Office and fundamentally alter the rules that for 200 years have governed how U.S. patents are issued. Both bills would convert that office from a federal agency to a government-sponsored corporation and force many patents to be made public 18 months after filed, even if they have not yet been granted, whereas today U.S. patents are made public only after they are issued. The bill would also shield some technology users from patent infringement suits. Proponents, including many big businesses and groups that speak for the biotechnology and pharmaceutical industries, hail the changes as necessary to make U.S. patent law conform with international standards and put American companies on an equal footing with foreign rivals. Opponents, including many small inventors and universities, complain that the public disclosure rule would enable big companies to steal their ideas. Some patent experts and inventors claim that at least one of the bill's provisions impinges on the idea of government-protected exclusivity, which lies at the heart of current patent law (K Day. A reinvention of patent rules. Washington Post, Business Section, E1, E4, 24 April 1997.) 34.   The purpose of the Drug Price Competition and Patent Term Restoration Act of 1984 (PL 98-417) was to restore part of the patent life lost during the regulatory approval process. It allows extension of the patent term to a period equal to the total time taken by the

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-->        FDA to review the new drug application plus one-half of the clinical testing time; it does not allow extension beyond 14 years of effective patent life. 35.   Food and Drug Administration. Miscellaneous. 21 CFR Ch. 1 (4-1-96 Edition): Part 316, Orphan Drugs. Act means the federal Food, Drug, and Cosmetic Act as amended by the Orphan Drug Act. The limitation on population size is based on prevalence, defined as the number of persons in the United States diagnosed as having the disease or condition at the time of the submission of the request for orphan drug designation, in other words, confirmed cases. 36.   Government Reform and Oversight Committee, Subcommittee on Human Resources, United States House of Representatives. 37.   These are for single, discrete preclinical studies and clinical research on potential orphan products. They represent a direct subsidy for orphan drug R&D by the FDA and are administered by its Office of Orphan Products Development in a manner parallel to other Public Health Service grants. In almost all cases, the grants have been limited to a maximum of $100,000 in direct costs per year for up to three years. The program has grown steadily. In 1990, 65 recipients were allocated a total of $7.6 million; while for-profit, nonprofit, and government organizations are eligible, for-profit organizations represent a very small part of the total program. At the same time, the large majority of orphan designations have gone to drug sponsors that are not PhRMA members, in other words, to smaller firms. This suggests that the act may have served to enhance the participation of such firms in pharmaceutical research and development, thereby expanding the competitive pool (Office of Technology Assessment [OTA]. Pharmaceutical R&D: Costs, Risks and Rewards. Washington, D.C.: United States Congress, February 1993). 38.   In this connection, FDA approval must be sought for each indication for which a company would like to market a given drug, a condition that some analysts define as yet another barrier (OTA 1993). 39.   Though what has happened in advocacy for breast cancer research was not discussed at the workshop, it is very much a model. With several other examples of the role of advocacy, it is represented in the inventory in Appendix B. 40.   The workshop participants' gloomy expectations seem well rooted in fact. In 1995, the United States spent about 0.1 percent of its gross national product on foreign assistance, a lower percentage than any of the other members of the Organization for Economic Cooperation and Development's Development Assistance Committee and less than Japan, France, and Germany in absolute dollars. Of the $9.9 billion spent on U.S. overseas assistance in 1994, just $1 billion was earmarked for health, primarily child survival and AIDS. The United States also remains in substantial arrears to those U.N. agencies that have health as a principal mandate, importantly including WHO. (Institute of Medicine, Board on International Health. America's Vital Interest in Global Health. Washington, DC: National Academy Press, 1997). At the same time, the World Bank's health portfolio, opened 15 years ago, has grown, so that the Bank is now the largest financier of international health. Its health portfolio in 1996 was $8 billion and is expected to grow by $2 billion annually over the remainder of this decade (Rockefeller Foundation, Social Science Research Council, Harvard School of Public Health. Enhancing the Performance of International Health Institutions: Pocantico Retreat, 1–3 February 1996. Cambridge, MA: Harvard Center for Population and Development Studies, 1996.)

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