Foreword ix Acknowledgments xiii 1.INTRODUCTION 1 2.HEALTH IN LOW-INCOME COUNTRIES 6 The Disease Environment in Low-Income Countries 6 Weak Health-Care Infrastructure 7 Malaria, Tuberculosis, and HIV/AIDS 11 The Impact of Cheap, Simple Technologies 20 3.THE PAUCITY OF PRIVATE R&D TARGETED TO THE NEEDS OF LOW-INCOME COUNTRIES 25 The Extent of R&D Targeted to Low-Income Countries 25 The Scientific Potential for New Vaccines 27 4.MARKET AND GOVERNMENT FAILURES 29 Why Target Foreign Assistance to Vaccine R&D? 30 The Patent Tradeoff 33 Low-Income Countries and Intellectual Property 36 Social versus Private Return: Some Quantitative Estimates 40 The Role of Public Purchases 42 5.THE ROLE OF PUSH PROGRAMS 45 Meningococcal Meningitis: An Example of a Successful Push Program 46 A Cautionary Tale: The USAID Malaria Vaccine Program 47 Incentives under Push Programs 49 6.THE POTENTIAL ROLE OF PULL PROGRAMS 55 The Effect of Market Size on Innovation 55 The Impact of Financial Incentive Programs 56 Examples of Pull Programs Stimulating Research 59 Advantages and Limitations of Pull Programs 63 7.PULL PROGRAMS: A MENU 68 Commitments to Finance Purchase of Products and Patents 68 Patent Extensions on Other Pharmaceuticals as Compensation for Vaccine Development 70 Best-Entry Tournaments 72 Expanding the Market for Existing Vaccines and Drugs 73 8.DETERMINING ELIGIBILITY 76 Basic Technical Requirements 76 Independent Adjudication Committee 78 Market-Test Requirement 81 Exit Clauses 84 9.HOW MUCH SHOULD WE PROMISE TO PAY FOR A VACCINE? 86 What Market Size Is Needed to Spur Research? 86 Cost-Effectiveness: What Is a Vaccine Worth? 90 10.HOW SHOULD PAYMENT BE STRUCTURED? 97 Paying for Multiple Vaccines and Market Exclusivity 100 Bonus Payments Based on Product Quality 103 Increasing the Promised Price over Time 105 Avoiding Windfalls 106 Industry Consultations 107 11.SCOPE OF THE COMMITMENT 109 What Diseases to Cover? 109 Vaccines, Drugs, and Other Technologies 109 Incentives for Agricultural R&D 112 12.MOVING FORWARD WITH VACCINE COMMITMENTS 115 Making a Commitment Legally Binding 116 The Politics of Creating Markets for Vaccines and Drugs 118 Potential Sponsors of New Markets for Vaccines and Drugs 119 References 127 Index 145
The public health of the developing world is the single issue of greatest significance for humanity over the next half century. This important book offers thoughtful analysis and practical ideas for confronting and addressing this issue through research and development of lifesaving vaccines. -- Lawrence H. Summers, President, Harvard University Michael Kremer and Rachel Glennerster have produced a work of outstanding importance to the well-being of developing countries. "There are five billion people in the poor world, many suffering from debilitating or fatal diseases. The potential gains in overcoming this human suffering from the development of effective and cost-efficient vaccines are enormous. Yet the economic purchasing power of the rich world favors the development of vaccines and drugs for the rich world. Strong Medicine presents workable incentives for research and development to respond more powerfully to the human needs of poor people. Kremer and Glennerster have produced results that deserve the attention of all those who work in development and that chart a way forward for one of the greatest issues of our time. -- Nicholas Stern, Second Permanent Secretary at HM Treasury in the United Kingdom, Visiting Professor at the London School of Economics, and former Chief Economist of the World Bank Strong Medicine is full of insights that can make a real difference to the morbid world in which we live. It combines powerful analytical reasoning with practical insights and empirical knowledge to explore a highly promising way of expanding incentives for medicinal research. The possibility of making a significant difference through a commitment to purchase effective vaccines as and when they are developed is thoroughly scrutinized in this definitive investigation, for which we have reason to be grateful. -- Amartya Sen, Harvard University, Nobel Laureate in Economic Sciences This important book, on how to design markets for drugs to treat millions of diseased people in the developing world, has the added advantage of being an interesting read. The authors convey very well the intellectual excitement associated today with putting mechanism design into practice. They take the reader, one step at a time, through the various levels at which problems might arise and then show how the design is meant to take care of these problems. -- Abhijit Banerjee, Massachusetts Institute of Technology Michael Kremer is likely the most thoughtful advocate of an exciting new approach for tackling the scourges of AIDS, malaria, and other diseases that primarily afflict the populations of less developed countries. In this book, he and Rachel Glennerster offer by far the most complete discussion I have seen of why this approach--one that would see authorities stimulate private efforts to develop medical treatment by providing a guaranteed market for them--should be adopted, and of how to deal with problems of implementation and design. -- Kenneth Sokoloff, University of California, Los Angeles
Michael Kremer is Gates Professor of Developing Societies at Harvard University, Senior Fellow at the Brookings Institution, and NonResident Fellow at the Center for Global Development. He founded and was the first executive director of WorldTeach, a nonprofit organization that places two hundred volunteer teachers annually in developing countries (1986-1989). He previously served as a teacher in Kenya. Rachel Glennerster is Director of the Poverty Action Lab at the Massachusetts Institute of Technology, a center devoted to evaluating the effectiveness of anti-poverty programs. She has worked on health and development policy at the UK Treasury, the Harvard Institute of International Development, and the International Monetary Fund.
Winner of the 2004 Award for Best Professional/Scholarly Book in Medical Science, Association of American Publishers "This book should interest anyone involved in international public health, politics and economics. It is a valuable effort to find a practical solution to a major problem."--Pierre Chirac, Nature
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